Reportof the Boardof Directors(Issued as of 17 February 2021)

Contents

02

1.

General Overview

03

2.

Summary 2020

03

3.

Share Capital and Stock Price Evolution

05

3.1
3.2
3.3
3.4

Shareholding and Voting Rights
Relationship with Principal ShareholdersShare Price Performance 2020
Dividend Policy

05
08
11
12

4.

Corporate Governance

13

4.1
4.2
4.3
4.4
4.5
4.6

Management and ControlConflict of Interest
Dutch Corporate Governance Code
Remuneration Report
Enterprise Risk Management System
Risk Factors

13
19
20
21
34
35

5.

Financial Performance

49

5.1
5.2

IFRS Consolidated Financial Statements
Information on Airbus SE auditors

49
54

6.

Non-Financial Information and other Corporate Activities

55

6.1
6.2

Non-Financial Information
Other Corporate Activities

55
89

7.

Airbus Strategy

95

7.1
7.2

Commercial Leadership, Value Creation and Profitability
Top Company Objectives 2021

95
97

8.

Financial Targets for 2021

98

Airbus SE / Report of the Board of Directors 2020

1. General Overview /Dear Shareholders,This is the Report of the Board of Directors (the “Board Report”) on the activities of Airbus SE(together with its subsidiaries referred to as the “Company”) during the 2020 financial year, preparedin accordance with Dutch law.
For further information regarding the Company’s business, finances, risk factors and corporate
governance, please refer to the Company’s website: www.airbus.com.

1. General Overview
Airbus pioneers sustainable aerospace for a safe and united
world. The Company constantly innovates to provide efficient andtechnologically-advanced solutions in aerospace, defence, andconnected services. In commercial aircraft, Airbus offers modern
and fuel-efficient airliners and associated services. Airbus is alsoa European leader in defence and security and one of the world’s
leading space businesses. In helicopters, Airbus provides themost efficient civil and military rotorcraft solutions and services
worldwide.

2. Summary 2020
As a consequence of the pandemic, the Company needed torevise its 2020 priorities, in particular in regards to the commercial
aircraft activites. The revised Top Company Objectives (“TCOs”)
reflected the essential targets that had to be achieved in order toadapt successfully to the COVID-19 environment. The TCOs mirror
the Company’s own business focus and its core pillars of safety,
quality, integrity, and compliance and focused on protecting
the core business by securing deliveries. The commitment toEthics & Compliance remained unchanged. The following revised
TCOs were made available to employees:

Industrial Performance
Secure our Supply Chain, stabilise end to end planning andachieve nominal flow on Single Aisle, transforming the ways ofworking to a Quality First approach (zero outstanding work).

Customer
Secure 2020 deliveries and manage the backlog in a volatile
market.

Financial Performance
Contain cash and secure liquidity while taking action to improve
competitiveness.

PeopleAdapt our company and workforce to the crisis in a responsible
manner that upholds the Company’s Values, while ensuring
Health and Safety and reinforcing our commitment to Ethics &Compliance.
The Company always:–– keeps customers at the heart of what it does and collaborates
to deliver value and reliability;–– serves those who rely on its products and services: safety andquality are non-negotiable;–– makes health and safety at work everyone’s priority;–– promotes a speak up and listen up culture, always acting withintegrity and respect while enforcing the Company’s Code of
Conduct and Ethics & Compliance standards and principles;and–– creates an inclusive culture where collaboration, empowerment,
continuous learning, and accountability are valued.
2020 was a year dominated by the pandemic, in particular for thecommercial aircraft activities. The Company showed resilienceand adapted to the challenges of the new COVID-19 environment.
Despite the situation, the Company achieved several important
operational and commercial milestones. A selection of key
announcements follows (the full list of announcements is availableat www.airbus.com/newsroom.html).

Airbus SE / Report of the Board of Directors 202003

2. Summary 2020 /–– Airbus delivered 566 commercial aircraft to 87 customers in
2020, in line with the production adaptation plan set out in
April 2020 in response to the COVID-19 pandemic. In orderto overcome international travel restrictions, the Airbus teamdeveloped an innovative e-delivery solution which represented
more than 25% of the 2020 deliveries, allowing customers toreceive their aircraft while minimising the need for their teams totravel. In 2020, Airbus recorded a total of 383 new orders (268
net orders) showing continued customer endorsements in all
market segments. The A220 won 64 new orders, confirming it
as the leading aircraft in its category. The A320 Family won 296
new orders including 37 A321XLR. In the widebody segment,
Airbus won 23 new orders including two A330s and 21 A350s.
–– Airbus delivered its first US-assembled A220 aircraft from
Mobile, Alabama, underlining its role as a global aircraft
producer and heralding the arrival of a new era in Airbus aircraft
production in the United States. In 2015, Mobile became home
to Airbus’ first US-based commercial aircraft manufacturing
facility. Now celebrating five years of production, it has grownfrom an initial workforce of around 250 staff producing
A320 Family aircraft, to 1,000 employees building both theA220 and A320 aircraft families.
–– The A330-800 received joint Type Certification fromthe European Aviation Safety Agency (“EASA”) and the Federal
Aviation Administration (“FAA”). The A330-800, part of a true
new-generation A330neo family, is the most efficient longest
range entry-level widebody and incorporates new Rolls‑Royce
Trent 7000 engines, a new 3D-optimised wing and new
Sharklets using lighter composite materials.
–– Airbus Corporate Jets won its first orders for the ACJ
TwoTwenty, totalling six aircraft following its launch. Entry
into service of the first ACJ TwoTwenty by Comlux Aviation istargeted for early 2023.
–– Airbus Helicopters logged 289 gross orders (net: 268 orders)in a challenging market heavily impacted by the economic
consequences of the COVID-19 pandemic, reinforcing
the Division’s position on the civil and parapublic market.
Additionally, it delivered 300 rotorcraft worldwide despite thepandemic travel restrictions, resulting in a stable 48% shareof the civil and parapublic market and thus allowing Airbus
Helicopters to maintain its market-leading position.
–– Airbus Helicopters’ multi-role twin engine H160 received its
type certificate from the EASA, marking a new chapter forthe programme.
–– The five-bladed H145 was certified by both EASA andthe US Federal Aviation Administration during 2020. The
certification covers the full range of capabilities, including
single-pilot and instrument flight rules (“IFR”) and single
engine operations (Cat. A/VTOL), along with night vision goggle
capability.
–– The German Bundeswehr ordered 31 NH90 NFH helicopters,
to be known as Sea Tiger, for the German Navy’s shipborne
operations. The helicopters will replace the German Navy’s
Sea Lynx Mk88A fleet which entered into service in 1981.
The Bundeswehr has already ordered 18 NH90 Sea Lion
naval transport helicopters, seven of which have already beendelivered.
–– The prototype of Airbus Helicopters’ VSR700 Unmanned Aerial
System (“UAS”) performed its first free flight. The VSR700
performed a ten minute flight at a drone test centre near
Aix‑en‑Provence in the south of France. This is a significant stepin the programme following the first flight in November 2019
when the prototype was tethered to comply with regulatory
requirements.
–– Airbus signed a contract to deliver 38 new Eurofighter aircraft to
the German Air Force. This makes Germany the largest ordering
nation in Europe’s biggest defence programme. The order, also04

Airbus SE / Report of the Board of Directors 2020

known by its project name Quadriga, covers the delivery of
30 single-seater and 8 twin-seater Eurofighters. Three of theaircraft will be equipped with additional test installations as
Instrumented Test Aircraft for the further development of theEurofighter programme.
–– Airbus was awarded a contract for the development, supply
and integration of 115 Eurofighter ESCAN Radars for theGerman and Spanish Eurofighter fleet. It marks the largest
order so far for the world’s most modern electronically scannedarray radar, Captor-E. The contract signature followed theapproval by both governments in the second half of 2020.
–– The governments of France and Germany awarded Dassault
Aviation, Airbus, together with their partners MTU AeroEngines, Safran, MBDA and Thales, the initial frameworkcontract (Phase 1A), which launches the demonstrator phasefor the Future Combat Air System (“FCAS”). This frameworkcontract covers a first period of 18 months and initiates workon developing the demonstrators and maturing cutting-edge
technologies, with the ambition to begin flight tests as soon
as 2026.
–– Airbus successfully completed the In-Orbit Commissioning(“IOC”) of the European Space Agency’s Solar Orbiter
spacecraft. Due to COVID-19 related restrictions, thecommissioning presented a challenge to the teams who
would normally work together in the office to complete theIOC process but instead met online to make sure the process
was tackled quickly and efficiently.
–– The Airbus-built European ocean satellite “Copernicus
Sentinel-6 Michael Freilich” successfully begun its “Seeingthe-Seas” mission. In November 2020 the satellite lifted-off
from Space Launch Complex 4E at Vandenberg Air Force
Base in California, USA.
–– Airbus signed a contract with Intelsat to build two OneSat
satellites operating in multiple frequency bands for Intelsat’s
next-generation software-defined network. The satellites will
be based on Airbus’ OneSat product line, the latest generationof fully flexible, in orbit reconfigurable, Software DefinedSatellites. OneSat is designed to deliver the optimal balance
between performance, flexibility and competitive cost per bit,while maintaining Airbus’ unrivalled product reliability.
–– Airbus revealed three concepts for the world’s first zeroemission commercial aircraft which could enter service by2035. These concepts each represent a different approachto achieving zero-emission flight, exploring various technology
pathways and aerodynamic configurations in order tosupport the Company’s ambition of leading the way in the
decarbonisation of the entire aviation industry. All of theseconcepts rely on hydrogen as a primary power source –an option which Airbus believes holds exceptional promise asa clean aviation fuel and is likely to be a solution for aerospaceand many other industries to meet their climate-neutral targets.
–– In 2020, the Airbus Foundation refocused to respond to the
COVID-19 pandemic. It prioritised support for humanitarian
actions of its NGO partners, transporting medical supplies in
addition to organising aid transports and providing satellite
imagery following devastating floods and hurricanes aroundthe world. The Foundation also continued to use its global
reach to inspire and develop children, including supporting
their parents and teachers. With many schools shifting toin‑classroom learning, the Airbus Foundation Discovery Space
proved valuable in offering a fun and engaging way for children
to explore the science behind flight and moon travel. Givenchanging societal challenges, the Airbus Foundation’s strategic
priorities – Humanitarian Aid and Youth Development – werebroadened and now include “Environment”, focusing on naturepreservation and assisting the climate change mitigation
actions of its NGO partners.

3. Share Capital and Stock Price Evolution /3.1 Shareholding and Voting Rights

3. Share Capital and Stock
Price Evolution
3.1 Shareholding and Voting Rights
Issued Share Capital
As of 31 December 2020, Airbus SE’s issued share capitalamounted to € 784,149,270, divided into 784,149,270 shares ofa nominal value of € 1 each. The issued share capital of Airbus SE
as of such date represents 26.14% of the authorised share capitalof € 3 billion comprising three billion shares. The holder of one
issued share has one vote and is entitled to profit in proportion
to his/her participation in the issued share capital (1).

Modification of Share Capital or Rights
Attached to Shares
The shareholders’ meeting has the power to authorise theissuance of shares. The shareholders’ meeting may also authorise
the Board of Directors, for a period of no more than five years,
to issue shares and to determine the terms and conditions ofshare issuances.
Holders of shares have a pre-emptive right to subscribe for any
newly issued shares in proportion to the aggregate nominal
value of shares held by them, except for: (i) shares issued forconsideration other than cash, (ii) shares issued to employeesof the Company and (iii) shares issued pursuant to a previously
granted right to subscribe for those shares. For the contractual
position as to pre-emption rights, see “– 3.2: Relationship with
Principal Shareholders”.
The shareholders’ meeting also has the power to limit or to
exclude pre-emption rights in connection with new issuances ofshares, and may authorise the Board of Directors, for a period of
no more than five years, to limit or to exclude pre-emption rights.
All resolutions in this context must be approved by a two-thirds
majority of the votes cast during the shareholders’ meeting, inthe case where less than half of the capital issued is present or
represented at said meeting.
However, the Articles of Association of Airbus SE (“Articles
of Association”) provide that the shareholders’ meeting is
not authorised to pass any shareholders’ resolution to issue
shares, or to grant rights to subscribe for shares, if the aggregate
issue price is in excess of € 500 million, per share issuance,and no preferential subscription rights exist in respect thereof(by virtue of Dutch law, or because they have been excludedby the competent corporate body). The same limitation applies
if the shareholders’ meeting wishes to designate the Boardof Directors to have the authority to resolve on such shareissuance or granting of rights. These limitations in the Articles of
Association can only be changed by the shareholders’ meetingwith a 75% voting majority.

Pursuant to the shareholders’ resolutions adopted at the Annual
General Meeting (“AGM”) held on 16 April 2020, the powers to
issue shares and to grant rights to subscribe for shares andto limit or exclude preferential subscription rights for existing
shareholders have been delegated to the Board of Directors forthe purpose of:
1. employee Share Ownership Plans and share-related Long-Term
Incentive Plans, provided that such powers shall be limited to
0.14% of Airbus SE’s authorised share capital; and2. funding Airbus SE and any of its subsidiaries, provided thatsuch powers shall be limited to 0.3% of Airbus SE’s authorised
share capital.
Such powers have been granted for a period expiring at the
AGM to be held in 2021, and shall not extend to issuing shares or
granting rights to subscribe for shares if: (i) there is no preferential
subscription right (by virtue of Dutch law, or because it has been
excluded by means of a resolution of the competent corporatebody) and (ii) it concerns an aggregate issue price in excess of€ 500 million per share issuance.
At the AGM held on 16 April 2020, the Board of Directors was
authorised for a period of 18 months from the date of such AGM
to repurchase shares of Airbus SE, by any means, including
derivative products, on any stock exchange or otherwise, as longas, upon such repurchase, Airbus SE would not hold more than
10% of Airbus SE’s issued share capital, and at a price per sharenot less than the nominal value, and not more than the higherof the price of the independent trade and the highest current
independent bid on the trading venues of the regulated marketof the country in which the purchase is carried out.
The shareholders’ meeting may reduce the issued share capitalby cancellation of shares or by reducing the nominal value of theshares by means of an amendment to the Articles of Association.
The cancellation of shares requires the approval of a two-thirds
majority of the votes cast during the shareholders’ meeting in
the case where less than half of the capital issued is present or
represented at the meeting; the reduction of nominal value bymeans of an amendment to the Articles of Association requires
the approval of a two-thirds majority of the votes cast during theshareholders’ meeting (unless the amendment to the Articles
of Association also concerns an amendment which under the
Articles of Association requires a 75% voting majority).
At the AGM held on 16 April 2020, the Board of Directors andthe Chief Executive Officer (“CEO”) were authorised, with powersof substitution, to implement a cancellation of shares held or
repurchased by Airbus SE, including the authorisation to establish
the exact number of the relevant shares thus repurchased tobe cancelled.

(1) Except for the shares held by Airbus SE itself and subject to certain other exceptions under Dutch law.

Airbus SE / Report of the Board of Directors 202005

3. Share Capital and Stock Price Evolution /3.1 Shareholding and Voting Rights

Securities Granting Access to Airbus SE’s Capital
There are no securities that give access, immediately or over time, to the share capital of Airbus SE (see “Notes to the IFRS
Consolidated Financial Statements – Note 36.3: Financing Liabilities”).

Changes in the Issued Share Capital in 2020
In the course of 2020, a total number of 976,155 new shares were issued, all of which were issued in the framework of the 2020
Employee Share Ownership Plan (“ESOP”).

Repurchases and Cancellations of Shares in 2020
During 2020 (i) Airbus SE repurchased 32,422 shares and (ii) none of the treasury shares were cancelled. As of 31 December 2020,
Airbus SE held 432,875 treasury shares.

Shareholding Structure at the End of 2020
As of 31 December 2020, the French State held 10.95% of the outstanding Airbus SE shares through Société de gestion departicipations aéronautiques (“Sogepa”), the German State held 10.93% through Gesellschaft zur Beteiligungsverwaltung GZBV
mbH & Co. KG (“GZBV”), and the Spanish State held 4.12% through Sociedad Estatal de Participaciones Industriales (“SEPI”).
The public (including the Company’s employees) and Airbus SE held, respectively, 73.94% and 0.06% of Airbus SE’s share capital.

The diagram below shows the ownership structure of Airbus SE as of 31 December 2020 (% of capital and of voting rights(in parentheses) before exercise of the convertible bond).

FRENCHSTATEGERMANSTATE

SPANISHSTATEOTHER GERMAN
PUBLIC ENTITIES

15.69%

KfW

84.31%

SOGEPASEPIGZBV(2)10.95%(10.95%)

4.12%(4.13%)

10.93%(10.94%)

Share subject to Shareholders’ Agreement

AIRBUS SE(1) Including shares held by the Company itself (0.06%).
(2) KfW & other German public entities.

06

Airbus SE / Report of the Board of Directors 2020

PUBLIC73.94%(1)(73.99%)

3. Share Capital and Stock Price Evolution /3.1 Shareholding and Voting Rights

Shareholders may have disclosure obligations under Dutch
law. These apply to any person or entity that acquires, holds or
disposes of an interest in the Airbus SE’s voting rights and/or
capital. Disclosure is required when the percentage of (actualor deemed) voting rights, capital interest or gross short position
reaches, exceeds or falls below 3%, 5%, 10%, 15%, 20%,
25%, 30%, 40%, 50%, 60%, 75% or 95% (whether becauseof an acquisition or disposal of shares or other instruments, or
because of a change in the total voting rights or capital issued).
Disclosures must be made to the Netherlands Authority for the
Financial Markets (“AFM”) immediately. Additional disclosureand/‌or publication obligations apply under European regulations
for net short positions in respect of Airbus SE.
In 2020, the below listed entity has notified the AFM of its
substantial interest in Airbus SE. For further details, please referto the website of the AFM at: www.afm.nl.
–– Capital Research and Management Company owns 9.90%of the votings rights in Airbus SE (9.63% directly and 0.27%
indirectly owned by Capital Group International, inc.).

Right to Attend Shareholders’ Meetings
Each holder of one or more shares may attend shareholders’meetings, either in person or by written proxy, speak andvote according to the Articles of Association. However, under(and subject to the terms of) the Articles of Association, theserights may be suspended under certain circumstances.
A shareholder, or another person who has the right to attend ashareholders’ meeting, can be represented by more than one
proxy holder, provided that only one proxy holder can exercise
the rights attached to each share.
The persons who have the right to attend and vote at shareholders’meetings are those who are on record in a register designated forthat purpose by the Board of Directors on the 28th day prior to
the day of the shareholders’ meeting (the “Registration Date”),
irrespective of who may be entitled to the shares at the time ofthat meeting.
As a prerequisite to attending the shareholders’ meeting andto casting votes, Airbus SE, or alternatively an entity or person
so designated by Airbus SE, should be notified in writing by
each holder of one or more shares and those who derive theaforementioned rights from these shares, not earlier than theRegistration Date, of the intention to attend the meeting inaccordance with the relevant convening notice.
Shareholders holding their Airbus SE 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 relevant convening notice.
For this purpose, a shareholder will also be able to requestthat its shares be registered directly (and not through Euroclear
France S.A.) in the register of Airbus SE. However, only sharesregistered in the name of Euroclear France S.A. may be tradedon 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 or to any other person designated for this purpose, as
specified in the relevant convening notice.
Pursuant to its Articles of Association, Airbus SE may provide
for electronic means of attendance, speaking and voting at theshareholders’ meetings in such circumstances, and subject tosuch conditions as determined by the Board of Directors.

Notification Requirements and Mandatory
Disposal Threshold Restricting
Ownership to 15%
Under the Articles of Association, each shareholder must notify
Airbus SE when it (or another party in respect of its interest in
Airbus SE) must make a notification to the AFM of a substantial
interest or short position with respect to Airbus SE, when its
interest (alone or with concert parties) reaches or crosses the
Mandatory Disposal Threshold (as defined below) or subject tocertain conditions and exemptions, when changes occur in thecomposition, nature and/or size of any interest held by it or by its
concert parties in excess of the Mandatory Disposal Threshold(as defined below). Failure to comply with these obligations
may, subject to a prior notification by Airbus SE, result in thesuspension of voting and attendance rights until the shareholder
has complied with its obligations.
The Articles of Association prohibit any shareholder fromholding an interest of more than 15% of the share capital or
voting rights of Airbus SE, acting alone or in concert withothers (the “Mandatory Disposal Threshold”). An interest(“Interest”) includes not only shares and voting rights, butalso other instruments that cause shares or voting rights
to be deemed to be at someone’s disposal pursuant to the
Dutch Financial Supervision Act, and must be notified to the
Dutch regulator, the AFM, if certain thresholds are reachedor crossed. Any shareholder having an interest of more thanthe Mandatory Disposal Threshold must reduce its interest
below the Mandatory Disposal Threshold, for instance bydisposing of its Excess Shares, within two weeks after such
notification by Airbus SE. Upon receipt of such notification, thevoting, attendance and dividend rights attached to the Excess
Shares shall be suspended. The same applies to concerts ofshareholders and other persons who together hold an interest
exceeding the Mandatory Disposal Threshold. Should suchshareholder or concert not comply with not exceeding the 15%
Mandatory Disposal Threshold by the end of such two-weekperiod, the voting, attendance and dividend rights attached
to all shares held by such shareholder or concert shall besuspended, and their Excess Shares would be transferred toa Dutch law foundation (“Stichting”), which can, and eventuallymust, dispose of them. The suspension of shareholder rights
described above shall be lifted once a shareholder or concert
complies with its obligations under the Articles of Association.
The Dutch law foundation would issue depositary receipts
to the relevant shareholder in return for the Excess Sharestransferred to the foundation, which would entitle the relevant
shareholder to the economic rights, but not the voting rights,
attached to such Airbus SE shares. The foundation’s Articles
of Association and the terms of administration governing therelationship between the foundation and the depositary receipt
holders provide, inter alia, that:–– the Board Members of the foundation must be independent
from Airbus SE, any grandfathered persons and their affiliates(see “– 3.1: Exemptions from Mandatory Disposal Threshold”)
and any holder of depositary receipts and their affiliates (there
is an agreement under which Airbus SE will, inter alia, cover
the foundation’s expenses and indemnify the Board Members
against liability);–– the Board Members are appointed (except for the initial
Board Members who were appointed at incorporation) anddismissed by the Management Board of the foundation(Airbus SE may however appoint one Board Member in asituation where there are no foundation Board Members);–– the foundation has no discretion as to the exercise of voting
rights attached to any of Airbus SE shares held by it and will ina mechanical manner vote to reflect the outcome of the votes

Airbus SE / Report of the Board of Directors 202007

3. Share Capital and Stock Price Evolution /3.2 Relationship with Principal Shareholders

cast (or not cast) by the other shareholders, and the foundation
will distribute any dividends or other distributions it receives
from Airbus SE to the holders of depositary receipts; and–– no transfer of a depositary receipt can be made without theprior written approval of the foundation’s Board.
For any shareholder or concert, the term “Excess Shares”, asused above, refers to such number of shares comprised in theinterest of such shareholder or concert exceeding the Mandatory
Disposal Threshold which is the lesser of: (i) the shares held bysuch shareholder or concert which represent a percentage of theCompany’s issued share capital that is equal to the percentage
with which the foregoing interest exceeds the Mandatory Disposal
Threshold; and (ii) all shares held by such person or concert.
This restriction is included in the Articles of Association to reflect
Airbus SE’s further normalised governance going forward, aiming
at a substantial increase of the free float and to safeguard theinterests of Airbus SE and its stakeholders (including all its
shareholders), by limiting the possibilities of influence above thelevel of the Mandatory Disposal Threshold or takeovers otherthan a public takeover offer resulting in a minimum acceptanceof 80% of the share capital referred to below.

Exemptions from Mandatory
Disposal Threshold
The restrictions pursuant to the Mandatory Disposal Thresholdunder the Articles of Association do not apply to a person
who has made a public offer with at least an 80% acceptance(including any Airbus SE shares already held by such person).
These restrictions also have certain grandfathering exemptions
for the benefit of shareholders and concerts holding interests
exceeding the Mandatory Disposal Threshold on 2 April 2013
(the “Exemption Date”), which is the date of first implementationof the Mandatory Disposal Threshold.
Different grandfathering regimes apply to such shareholders andconcerts, depending on the interests and the nature thereof heldby each such shareholder or concert on the Exemption Date.

Airbus SE has confirmed that: (i) the specific exemption inarticle 16.1.b of the Articles of Association applies to Sogepa,
as it held more than 15% of the outstanding Airbus SE’s voting
rights and shares including the legal and economic ownershipthereof on the Exemption Date; and (ii) the specific exemption inarticle 16.1.c of the Articles of Association applies to the concert
among Sogepa, GZBV and SEPI, as they held more than 15% of
the outstanding Airbus SE’s voting rights and shares including thelegal and economic ownership thereof on the Exemption Date.

Mandatory Public Offer Under Dutch Law
In accordance with Dutch law, shareholders are required to makea public offer for all issued and outstanding shares in Airbus SE’sshare capital if they – individually or acting in concert (as suchterms are defined under Dutch law summarised below), directly
or indirectly – have 30% or more of the voting rights (significant
control) in Airbus SE. In addition to the other available exemptions
that are provided under Dutch law, the requirement to makea public offer does not apply to persons, who at the time thetakeover provisions under Dutch law came into force, alreadyheld – individually or acting in concert – 30% or more of the voting
rights in Airbus SE. In the case of such a concert, a new memberof the concert can be exempted if it satisfies certain conditions.

Amendments to the Articles
of Association
According to the Articles of Association, resolutions to amend
the Articles of Association require a two-thirds majority of thevotes validly cast at a general meeting of shareholders, unlessthey concern amendments to a limited number of provisions
thereof, in which case a 75% voting majority will be required.
The proposal containing the literal text of a proposed amendment
must be available for inspection by shareholders at Airbus SE’s
headquarters, from the day the meeting is convened until after
the end of the meeting.

3.2 Relationship with Principal Shareholders
In 2013, GZBV, a subsidiary of Kreditanstalt für Wiederaufbau(“KfW”), a public law institution serving domestic and international
policy objectives of the Government of the Federal Republicof Germany, Sogepa and SEPI, entered into a shareholders’agreement (the “Shareholders’ Agreement”). The Shareholders’
Agreement, further details of which are set out below, does notgive the parties to it any rights to designate Members of theBoard of Directors or management team or to participate in thegovernance of Airbus SE. Airbus SE has also entered into state
security agreements with each of the French State and German
State, which are also described in more detail below.

08

Airbus SE / Report of the Board of Directors 2020

3.2.1 Corporate Governance
Arrangements
Corporate governance arrangements of Airbus SE were
substantially changed in 2013, resulting in changes in thecomposition of the Board of Directors and its internal rules, aswell as amendments to the Articles of Association of Airbus SE.
These changes were intended to further normalise and simplify
Airbus SE’s corporate governance, reflecting an emphasis on
best corporate governance practices and the absence of acontrolling shareholder group. Changes to Airbus SE’s corporate
governance arrangements in the Articles of Association, included:(i) disclosure obligations for shareholders that apply when theirinterests in Airbus SE reach or cross certain thresholds and(ii) ownership restrictions prohibiting any shareholder fromholding an interest of more than 15% of the share capital or
voting rights of Airbus SE, acting alone or in concert with others(see “– 3.1: Exemptions from Mandatory Disposal Threshold”).

3. Share Capital and Stock Price Evolution /3.2 Relationship with Principal Shareholders

3.2.2 Shareholder Arrangements
Grandfathering Agreement
The French State, Sogepa, the German State, KfW and GZBV
(all parties together the “Parties” and each, individually, asa “Party”) entered into an agreement with respect to certain
grandfathering rights under the Articles of Association. Below
is a summary of such agreement.

Individual Grandfathering Rights
A Party that is individually grandfathered pursuant to Article 16.1.bof the Articles of Association (such Party holding “Individual
Grandfathering Rights”) shall remain individually grandfatheredin accordance with the Articles of Association if the concert withrespect to Airbus SE (the “Concert”) is subsequently terminated(for instance by terminating the Shareholders’ Agreement) or if
it exits the Concert.

Loss of Individual Grandfathering Rights
A Party holding Individual Grandfathering Rights as well as anyof its affiliates who are grandfathered pursuant to Article 16.1.b inconjunction with Article 16.3 of the Articles of Association (suchaffiliates holding “Derived Grandfathering Rights”, and theIndividual Grandfathering Rights and the Derived Grandfathering
Rights, together, the “Grandfathering Rights”) shall all no longer
be entitled to exercise their Grandfathering Rights in the event:–– the Concert is terminated as a result of it or any of its affiliates
having actually or constructively terminated such Concert; or–– it or its relevant affiliate(s) exit(s) the Concert,and such termination or exit is not for good cause and is not basedon material and ongoing violations of the Concert arrangements,
including, without limitation, of the Shareholders’ Agreement, by
the other principal Member of the Concert.
In the event that in the future the voting rights in the Company of
the other principal Member of the Concert, together with thoseof its affiliates, would for an uninterrupted period of three months
represent less than 3% of the outstanding aggregate voting rights
of Airbus SE, the Grandfathering Rights of the Party, including its
affiliates which were no longer entitled to use their Grandfathering
Rights, shall from then on revive and Sogepa and GZBV shalljointly notify Airbus SE to that effect.

Notification to the Company
Airbus SE will not be required to take any of the actions provided
for in Article 15 of the Articles of Association pursuant to thepost-Concert Grandfathering Agreement unless and until it
receives: (i) a joint written instruction from Sogepa and GZBVwith respect to the taking of any of the actions provided for in
Article 15 of the Articles of Association pursuant to the postConcert Grandfathering Agreement, or (ii) a copy of a binding
advice rendered by three independent, impartial and neutral
Expert Adjudicators in order to settle any dispute between theParties arising out of or in connection with the post-Concert
Grandfathering Agreement.
Airbus SE will not incur any liability to any of the Parties by taking
such actions following receipt of any such joint instruction orbinding advice and the Company will not be required to interpretthe post-Concert Grandfathering Agreement or any such joint
instruction or binding advice. Notwithstanding the description

under “Various provisions – Jurisdiction” below, the courts of
the Netherlands will have exclusive jurisdiction to resolve any
dispute, controversy or claim affecting the rights or obligations of
the Company under the post-Concert Grandfathering Agreement.

Various Provisions
Termination. The post-Concert Grandfathering Agreement
terminates only if either the French State and its affiliates or
the German State and its affiliates no longer hold shares in the
Company.
Governing law. Laws of the Netherlands.
Jurisdiction. The courts of the Netherlands shall have exclusive
jurisdiction. This is binding advice for any dispute, controversy
or claim arising out of or in connection with the post-Concert
Grandfathering Agreement, in accordance with the procedure set
forth in the post-Concert Grandfathering Agreement; provided,
however, that application to the courts is permitted to resolve
any such dispute controversy or claim.

Governance of the Company
Below is a further description of the Shareholders’ Agreement,
based solely on a written summary of the main provisionsof the Shareholders’ Agreement that has been provided to
Airbus SE by Sogepa, GZBV and SEPI (all parties together the“Shareholders”).
Appointment of the Directors: The Shareholders shall votein favour of any draft resolution relating to the appointment of
Directors submitted to the shareholders’ meeting of Airbus SE in
accordance with the terms and conditions of the German State
Security Agreement and the French State Security Agreement(as described below). If, for whatever reason, any person to beappointed as a Director pursuant to the German State Security
Agreement or the French State Security Agreement is notnominated, the Shareholders shall use their best endeavours
so that such person is appointed as a Director. Sogepa and
GZBV shall support the appointment of one Spanish national thatSEPI may present to them as Member of the Board of Directorsof Airbus SE, provided such person qualifies as an independent
Director pursuant to the conditions set forth in the rules governing
the internal affairs of the Board of Directors (the “Board Rules”),
and shall vote as Shareholders in any Shareholders’ meeting infavour of such appointment and against the appointment of any
other person for such position. If, for whatever reason, the French
State Security Agreement and/or the German State Security
Agreement has/have been terminated, KfW or Sogepa, as thecase might be, shall propose two persons, and the Shareholders
shall exercise their best endeavours so that these persons areappointed as Directors. Directors can be dismissed by theGeneral Meeting at all times.
Modification of the Articles of Association: Sogepa and
GZBV shall consult each other on any draft resolution intending
to modify the Board Rules and/or the Articles of Association.
Unless Sogepa and GZBV agree to vote in favour together ofsuch draft resolution, the Shareholders shall vote against suchdraft resolution. If Sogepa and GZBV reach a mutual agreementon such draft resolution, the Shareholders shall vote in favour ofsuch draft resolution.

Airbus SE / Report of the Board of Directors 202009

3. Share Capital and Stock Price Evolution /3.2 Relationship with Principal Shareholders

Reserved Matters: With respect to the matters requiring theapproval of a Qualified Majority at the Board level (“Reserved
Matters”), all the Directors shall be free to express their own
views. If the implementation of a Reserved Matter would require adecision of the Shareholders’ meeting of Airbus SE, Sogepa and
GZBV shall consult each other with a view to reaching a common
position. Should Sogepa and GZBV fail to reach a common
position, Sogepa and GZBV shall remain free to exercise on adiscretionary basis their votes.
Prior consultation: Sogepa and GZBV shall consult each otheron any draft resolution submitted to the Shareholders’ meetingother than related to Reserved Matters and the Board Rules.

Balance of Interests
The Shareholders agree to pursue their common objective toseek a balance between themselves and their respective interests
in Airbus SE as follows:–– to hold as closely as reasonably possible to 12% of the voting
rights for Sogepa, together with any voting rights attributable
to Sogepa and/or to the French State, pursuant to Dutch
takeover rules except for voting rights attributable due to acting
in concert with the other parties;–– to hold as closely as reasonably possible to 12% of the voting
rights for GZBV, together with any voting rights attributable to
GZBV and/or to the German State, pursuant to Dutch takeoverrules except for voting rights attributable due to acting inconcert with the other parties; and–– to hold as closely as reasonably possible to 4% of the voting
rights for SEPI, together with any voting rights attributable to
SEPI and/or to the Spanish State, pursuant to Dutch takeoverrules except for voting rights attributable due to acting inconcert with the other parties.

Mandatory Takeover Threshold
The total aggregate voting rights of the Shareholders shall always
represent less than 30% of the voting rights of the Company,or less than any other threshold the crossing of which would
trigger for any Shareholder a mandatory takeover obligation(the “MTO Threshold”). In the event that the total aggregate
voting rights of the Shareholders exceed the MTO Threshold,the Shareholders shall take all appropriate actions as soon asreasonably practicable, but in any event within 30 days, to fall
below the MTO Threshold.

Transfer of Securities
Permitted transfer. Transfer of securities by any Shareholder
to one of its affiliates.
Pre-emption right. Pro rata pre-emption rights of the
Shareholders in the event any Shareholder intends to transfer
any of its securities to a third party directly or on the market.
Call option right. Call option right for the benefit of the
Shareholders in the event that the share capital or the voting
rights of any Shareholders cease to be majority owned directly or
indirectly by the French State, the German State or the Spanish
State as applicable.
Tag-along right. Tag-along right for the benefit of SEPI in theevent that Sogepa, the French State or any of their affiliates andany French public entity and GZBV, the German State or any of
their affiliates and any public entity propose together to transfer
all of their entire voting rights interests.

10

Airbus SE / Report of the Board of Directors 2020

Various Provisions
Termination. The Shareholders’ Agreement may cease to apply
in respect of one or more Shareholders and/or their affiliates,
subject to the occurrence of certain changes in its or theirshareholding interest in Airbus SE, or in its or their shareholders.
Governing law. Laws of the Netherlands.
Jurisdiction. Arbitration in accordance with the Rules ofArbitration of the International Chamber of Commerce, with theseat of arbitration in The Hague (the Netherlands).

3.2.3 Undertakings with Respect
to Certain Interestsof Certain Stakeholders
Airbus SE has made certain undertakings and entered into
certain agreements in connection with certain interests of its
former core shareholders and the German State.

State Security Agreements and Related
Undertakings
Airbus SE and the French State have entered into an amendment
to the existing convention between them relating to the Company’sballistic missiles business (as so amended, the “French State
Security Agreement”). Under the French State Security
Agreement, certain sensitive French military assets are held by a
Airbus SE subsidiary (the “French Defence Holding Company”).
The French State has the right to approve or disapprove of– but not to propose or appoint – three outside Directors on the
Board of Directors of the French Defence Holding Company(the “French Defence Outside Directors”), at least two of whommust qualify as Independent Directors under the Board Rules ifthey are Members of the Board of Directors. Two of the French
Defence Outside Directors are required also to be Members of
the Board of Directors of Airbus SE. French Defence Outside
Directors may neither (i) be employees, managers or corporate
officers of a company belonging to Airbus SE (although they may
be Members of the Board of Directors of Airbus SE) nor (ii) havematerial ongoing professional relationships with Airbus SE.
Airbus SE and the German State have entered into an agreement
relating to the protection of essential interests to the German
State’s security (the “German State Security Agreement”).
Under the German State Security Agreement, certain sensitive
German military activities are pursued directly or indirectly
by a Airbus SE subsidiary (the “German Defence Holding
Company”). The German State has the right to approve ordisapprove of – but not to propose or appoint – three outside
Directors to the Supervisory Board of the German Defence
Holding Company (the “German Defence Outside Directors”),
at least two of whom must qualify as Independent Directors underthe Board Rules if they are Members of the Board of Directors.
Two of the German Defence Outside Directors are required
to also be Members of the Board of Directors. The qualifications
to serve as a German Defence Outside Director are comparable
to those to serve as a French Defence Outside Director.
In February 2021, Airbus SE and the Spanish State entered into
an agreement relating to the protection of essential security
interests to the Spanish State (the “Spanish State Security
Agreement”). Under the Spanish State Security Agreement,
certain sensitive Spanish military assets are held by a Company’s
subsidiary (the “Spanish Defence Holding Company”).
Pursuant to the Spanish State Security Agreement, Airbus SE

3. Share Capital and Stock Price Evolution /3.3 Share Price Performance 2020

granted the Spanish State a pre-emption right to acquire thesensitive assets as defined under the Spanish State Security
Agreement. The pre-emption right applies in case the Spanish
Defence Holding Company wishes to sell the sensitive assets toan entity outside Airbus or outside Spain’s territory. In such case,the Spanish State has the right to acquire the sensitive assets.

Dassault Aviation
Airbus SE entered into an agreement with the French State
pursuant to which Airbus SE:–– grants the French State a right of first offer in case of the saleof all or part of its shareholding in Dassault Aviation;–– commits to consult with the French State prior to making any
decision at any shareholders’ meeting of Dassault Aviation;–– Airbus SE holds 9.90% of Dassault Aviation’s share capitaland 6.12% of its voting rights.

Stock Exchange Listings
Airbus SE has undertaken to the parties to the Shareholders’
Agreement that, for the duration of the Shareholders’ Agreement,
Airbus SE’s shares will remain listed exclusively in France,
Germany and Spain.

Specific Rights
French State: Pursuant to the “French State Security
Agreement”, Airbus SE has granted to the French State: (a) a vetoright, and subsequently, a call option on the shares of Airbus SE
performing the ballistic missiles activity exercisable under certain
circumstances, including if (i) a third party acquires, directly or
indirectly, either alone or in concert, more than 15% or any
multiple thereof of the share capital or voting rights of Airbus SE,or (ii) the sale of the shares of such companies carrying out suchactivity is considered, and (b) a right to oppose the transfer ofany such shares.
German State: Pursuant to the “German State Security
Agreement”, Airbus SE and the German Defence Holding
Company have granted to German State a pre-emption rightto acquire the sensitive activities, as defined under the German
State Security Agreement. The pre-emption right applies incase the German Defence Holding Company wishes to sell thesensitive activities to an entity outside Airbus SE, or outside
the German territory, or the shares of a controlled entity whichhosts sensitive activities. In such case, the German State may
acquire the shares of such controlled entity. Furthermore, theGerman State has the right to acquire the sensitive activities incase Airbus SE intends to allocate the sensitive activities outside
Germany or to give-up the sensitive activities.

3.3 Share Price Performance 2020
Share price in%

2018

170%

2019

2020

160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
60%
50%
Dec-17

Dec-18AIRBUSEuroStoxx 600 Index

Dec-19CAC 40 Index

Dec-20MSCI World Aerospace & Defence Index

Airbus SE / Report of the Board of Directors 202011

3. Share Capital and Stock Price Evolution /3.4 Dividend Policy

In 2020, the Airbus SE share price decreased throughout theyear to close at € 89.78, down -31%.
After opening at € 132.58 in January, the Airbus SE share pricestarted the year in positive territory, reaching an all time high inJanuary, at € 139.00, in the wake of the 2019 strong performance.
The Airbus SE share price then sharply decreased in February
and March following the COVID-19 outbreak and the spreadoutside China, down to its lowest point in 2020 at € 49.07 on
18 March 2020.
While widespread lockdowns continued to weigh on stock
performance, the Airbus SE share price slightly increased in
Q2, supported by the announcement of measures to strengthen
Airbus’ liquidity and the adjustment of production levels to the
new environment.
In early June, the Airbus SE share price followed global markets
with a strong increase, reﬂ ecting optimism on a faster than
expected economic recovery, peaking at € 81.91 on 8 June 2020.
Subsequentely, this rally has been partially reduced due to amore pessimistic outlook on the recovery of the global economy
as published by the International Monetary Fund and the Fed.

In Q3, the Airbus SE share price was rather stable. In July, theshare price increased in line with the market, on the sentiment ofa slowing pace of infection and the Airbus SE H1’20 results whichwere well received by the market under the circumstances. Afterthe summer, shares went down again following an increasing
fear of resurgence of the pandemic, new travel restrictions andthe general uncertainty around the US presidential election.
(EuroStoxx 600 +0%, S&P 500 +8%).
Shares recovered in Q4 supported by the announcement ofeffective vaccines and following a reassuring 9m disclosure,when Airbus SE announced a positive Free Cash Flow (“FCF”)
before M&A and customer ﬁnancing in the third quarter 2020
and issued a guidance to achieve at least a breakeven FCF in
the fourth quarter 2020.
With an annual decrease of -31% in 2020, Airbus SE shares
underperformed the Eurostoxx 600 (-4%) and the CAC40 (-7%),
as well as Aerospace & Defence sector (MSCI World Aerospace& Defence -17%).

3.4 Dividend Policy
In December 2013, Airbus formalised a dividend policy
demonstrating a strong commitment to shareholder returns.
This policy targets sustainable growth in the dividend within a
pay-out ratio of 30%-40%.
However, in 2020, the COVID-19 pandemic has severely
disrupted the world economy, commercial air trafﬁc, commercial
aircraft demand the aerospace industry and consequently, theCompany’s business operations and ﬁnancial performance.
As the global health and economic crisis still evolves, theCompany’s business, results of operations and ﬁnancial condition
continue to be materially affected by the COVID-19 pandemic, andthe Company continues to face signiﬁcant risks and uncertainties.

12

Airbus SE / Report of the Board of Directors 2020

As a result, there will be no dividend proposed for 2020. (FY 2019:
dividend proposal of € 1.80 per share was revoked following the
COVID-19 outbreak).
This decision aims at strengthening the Company’s ﬁnancial
resilience by protecting its Net Cash position and at supporting
the Company’s ability to adapt as the situation evolves.
In the absence of a dividend proposal for 2020, no resolution
related to a dividend proposal will be presented at the AGM.

4. Corporate Governance /4.1 Management and Control

4. Corporate Governance
4.1 Management and Control
4.1.1 Composition, Powers
and Rules
Under the Articles of Association, the Board of Directors consistsof at most 12 Directors, who each retire at the close of the AGM
held three years following their appointment. Under the Board
Rules, at least a majority of the Members of the Board of Directors(i.e., 7/12) must be European Union (“EU”; any reference in the
Board Rules to the EU includes the United Kingdom (“UK”) andits constituent countries, notwithstanding a withdrawal of the UKfrom the EU) nationals (including the Chairman of the Board of
Directors) and a majority of such majority (i.e., 4/7) must be both
EU nationals and residents. No Director may be an active civil
servant. The Board of Directors has one Executive Director and
11 Non-Executive Directors. While the Board of Directors appoints
the CEO, the CEO is required to be an Executive Director andmust be an EU national and resident; therefore it is anticipated thatthe Board of Directors will appoint as CEO the person appointed
by the shareholders as an Executive Director. At least nine of
the Non-Executive Directors must be “Independent Directors”(including the Chairman of the Board of Directors).
Under the Board Rules, an “Independent Director” is a
Non‑Executive Director who is independent within the meaning of
the Dutch Corporate Governance Code (the “Dutch Code”) andmeets additional independence standards. Specifically, where
the Dutch Code would determine non-independence, in part,by reference to a Director’s relationships with shareholders who
own at least 10% of the Company, the Board Rules determine
such Director’s non-independence, in relevant part, by reference
to such Director’s relationships with shareholders who own atleast 5% of the Company. According to the criteria of the Dutch
Code and the Board Rules, all Non-Executive Directors (including
the Chairman) presently qualify as an “Independent Director”.
The Remuneration, Nomination and Governance Committee(the “RNGC”) of the Board of Directors is charged withrecommending to the Board of Directors the names of candidates
to succeed active Board Members after consultation with the
Chairman of the Board of Directors and the CEO.
The Board of Directors, deciding by simple majority vote,proposes individuals to the shareholders’ meeting of theCompany for appointment as Directors by the shareholders’meeting. No shareholder or group of shareholders, or any otherentity, has the right to propose, nominate or appoint any Directors
other than the rights available to all shareholders under general
Dutch corporate law.
In addition to the membership and composition rules describedabove, the RNGC, in recommending candidates for the Board of
Directors, and the Board of Directors in its resolutions proposed tothe shareholders’ meeting regarding the renewal or appointment
of Directors, are both required to apply the following principles:–– the preference for the best candidate for the position;–– the preference for gender diversity between equal profiles;–– the maintenance of appropriate skills mix and geographicalexperience;–– the maintenance, in respect of the number of Members of
the Board of Directors, of the observed balance among
the nationalities of the candidates in respect of the locationof the main industrial centres of the Company (in particularamong the nationals of France, Germany, Spain and the United
Kingdom, where these main industrial centres are located); and–– at least a majority of the Members of the Board of Directors(i.e., 7/12) shall be EU nationals (including the Chairman), anda majority of such majority (i.e., 4/7) shall be both EU nationals
and residents (including the UK and its constituent countries,
notwithstanding a withdrawal of the UK from the EU).
In accordance with these principles, the Board of Directors shallcontinue to seek greater diversity with respect to gender, age,geography, education, profession and background.
In 2020, Mr Dunkerley and Mr Gemkow joined the Board of
Directors as Non-Executive Directors replacing Mr Ranqueand Mr Lamberti. Both with a comprehensive expertise in theairline industry and finance, they have the right competencies
and personal skills to fulfil their position in line with the Boardof Directors’s expectations and the evolution of the Company’sbusiness.
At the end of 2020, the average age of the Members of the Boardof Directors was 59. The proportion of female representatives
is today at 25%. The Board of Directors composition showsa balanced mix of experience with, for example, six Members
having aerospace industry skills, six having geopolitical skills, ninehaving finance skills, four having information or data management
skills and four having manufacturing and production skills.
More details about the diversity of the Members of the Board of
Directors are available in the table shown on page 21 (Airbus SE
Board of Directors until AGM 2021).
The Board of Directors is required to take into account, in the
resolutions proposed in respect of the renewal or nominationof Directors presented to the shareholders’ meeting, theundertakings of the Company to the French State, pursuant to theamendment to the French State Security Agreement, and to theGerman State, pursuant to the German State Security Agreement,in each case as described more fully above. In practice, thismeans that at all times the Board of Directors needs to have:(i) two Directors who should also be French Defence Outside
Directors (as defined above) of the French Defence Holding
Company (as defined above) who have been proposed by theCompany and consented to by the French State and (ii) two
Directors who should also be German Defence Outside Directors(as defined above) of the German Defence Holding Company(as defined above) who have been proposed by the Company
and consented to by the German State.
The RNGC endeavours to avoid a complete replacementof outgoing Directors by new candidates and draws up an
appointment and reappointment schedule for the Directors after
consultation with the Chairman and the CEO. In drawing up sucha schedule, the RNGC considers the continuity of companyspecific knowledge and experience within the Board of Directors,
also taking into account that a Director should at the time of
his/her appointment or re-appointment not be older than 75 years

Airbus SE / Report of the Board of Directors 202013

4. Corporate Governance /4.1 Management and Control

and ensuring that at least one third of Directors’ positions areeither renewed or replaced every year for a term of three years.
This is to avoid large block replacements of Directors at one
single AGM, with the corresponding loss of experience andintegration challenges, provided that exceptions to these rules
may be agreed by the Board of Directors if specific circumstances
provide an appropriate justification for such exceptions.

Voting and Rules
Most Board of Directors’ decisions can be made by a simple
majority of the votes cast by Directors (a “Simple Majority”),
but certain decisions must be made by a two-thirds majority(i.e., eight favourable votes) of votes cast by the Directors
regardless of whether they are present or represented in respectof the decision (a “Qualified Majority”). In addition, amendments
to certain provisions of the Board Rules require the unanimous
approval of the Board of Directors, with no more than one Director
not being present or represented (including provisions relating tonationality and residence requirements with respect to Membersof the Board of Directors and the Executive Committee). However,no individual Director or class of Directors has a veto right withrespect to any Board of Directors’ decisions.

Powers of the Members of the Boardof Directors
The Board Rules specify that in addition to the Board of
Directors’ responsibilities under applicable law and the Articles
of Association, the Board of Directors is responsible for certain
enumerated categories of decisions. Under the Articles of
Association, the Board of Directors is responsible for the
management of the Company. Under the Board Rules, the Boardof Directors delegates the execution of the strategy as approvedby the Board of Directors and the day-to-day management of
the Company to the CEO, who, supported by the Executive
Committee and its executive leadership team, makes decisions
with respect to the management of the Company. However,
the CEO should not enter into transactions that form part of
the key responsibilities of the Board of Directors, unless thesetransactions have been approved by the Board of Directors.
Matters that require Board of Directors’ approval include among
others, the following items (by Simple Majority unless otherwise
noted):–– approving any change in the nature and scope of the businessof the Company;–– debating and approving the overall strategy and the strategicplan of the Company;–– approving the operational business plan of the Company(the “Business Plan”) and the yearly budget of the Company(the “Yearly Budget”), including the plans for Investment,
research and development (“R&D”), Employment, Financeand as far as applicable, major programmes;

14

Airbus SE / Report of the Board of Directors 2020–– nominating, suspending or revoking the Chairman of the Boardof Directors and the CEO (Qualified Majority);–– approving of all of the Members of the Executive Committee
as proposed by the CEO and their service contracts and othercontractual matters in relation to the Executive Committee anddeciding upon the appointment and removal of the Secretary
to the Board of Directors on the basis of the recommendationof the RNGC;–– approving the relocation of the headquarters of the principal
companies of the Company and of the operational headquartersof the Company (Qualified Majority);–– approving decisions in connection with the location of new
industrial sites material to the Company or the change of thelocation of existing activities that are material to the Company;–– approving decisions to invest and initiate programmes financedby the Company, acquisition, divestment or sale decisions, ineach case for an amount in excess of € 300 million;–– approving decisions to invest and initiate programmes financedby the Company, acquisition, divestment or sale decisions, ineach case for an amount in excess of € 800 million (Qualified
Majority);–– approving decisions to enter into and terminate strategic
alliances at the level of the Company or at the level of one ofits principal subsidiaries (Qualified Majority);–– approving matters of shareholder policy, major actions or majorannouncements to the capital markets; and–– approving decisions in respect of other measures and businessof fundamental significance for the Company or which involves
an abnormal level of risk.
The Board of Directors must have a certain number of Directors
present or represented at a meeting to take action. This quorum
requirement depends on the action to be taken. For the Boardof Directors to make a decision on a Simple Majority matter,a majority of the Directors must be present or represented.
For the Board of Directors to make a decision on a Qualified
Majority matter, at least ten of the Directors must be present or
represented. If the Board of Directors cannot act on a Qualified
Majority Matter because this quorum is not satisfied, the quorum
would decrease to eight of the Directors at a new duly calledmeeting.
In addition, the Board Rules detail the rights and duties of theMembers of the Board of Directors and set out the core principles
which each Member of the Board of Directors shall comply withand shall be bound by, such as acting in the best interest of theCompany and its stakeholders, devoting necessary time andattention to the carrying out of his/her duties and avoiding any
and all conflicts of interest.

4. Corporate Governance /4.1 Management and Control

Airbus SE Board of Directors until AGM 2021
Committee attendance
Board member
Age*, Gender, Nationality

StatusTerm Primary occupation
expires & Other mandates

Since

Director expertiseBoard
attendance

Audit

René
OBERMANN*** Independent 201857, M, German

2021

Chairman of the Boardof Directors of Airbus SE
and Managing Directorof Warburg Pincus
Deutschland GmbH

Guillaume
FAURY
52, M, French

Executive

2019

2022

Chief Executive Officer
of Airbus SE

13/13

Victor
CHU***
63, M, Chinese /BritishIndependent 2018

2021

Chairman and CEO
of First Eastern
Investment Group

13/13

Jean-Pierre
CLAMADIEU*** Independent 201862, M, French

2021

Chairman of the Boardof Engie and memberof the Board of AXA SA

13/13

2013,
Ralph D.
previous
CROSBY, Jr.
Independent2023
re-election
73, M, Americanin 2020

Member of the Boardof Directors of American
Electric Power Corp.

13/13

2017,
Lord DRAYSON
previous(Paul)
Independent2023
re-election
60, M, British
in 2020

Founder & CEO
of Sensyne Health plc
and Co-Founder &Chairman of Sensyne
Health Holdings Ltd

13/13

Mark
DUNKERLEY
57, M, British

Independent 2020

2023

Member of the Boardof Spirit Airlines Inc.

3/3
7/8
(from AGM (from AGM
2020)
2020)

Stephan
GEMKOW
61, M, German

Independent 2020

2023

Member of theBoard of Amadeus IT
Group and Flughafen
Zürich AG

3/3
8/8(from AGM (from AGM
2020)
2020)

Catherine
GUILLOUARD
56, F, French

2016,
previous
Independent
re-election
in 20192022

Chairwoman and Chief
Executive Officer of RATP
Group and member of
the Supervisory Board
of SYSTRA and of KPN

13/13

AmparoMORALEDA***56, F, Spanish

Independent

2015,
previous
re-election
in 2018

2021

Member of the Board of
Directors of Solvay SA,
CaixaBank SA
and Vodafone PLC

12/13

Claudia
NEMAT
52, F, German

Independent

2016,
previous
re-election
in 2019

2022

Member of the Board ofManagement of Deutsche
Telekom AG

12/13

CarlosTAVARES62, M,
Portuguese

Independent

2016,
previous
re-election
in 20192022

Chief Executive Officerof Stellantis N.V.

11/13

13/13

RNGC

ECSC**
1/1(until AGM
2020)

2/2
(until AGM
2020)

5/5

4/4

(from AGM
2020)
4/4

4/4

3/4

5/5

4/4

5/5

4/4

4/4

3/4

Board and Committee meetings in 2020

13

5

4

4

Average attendance rate in 2020

97%

100%

94%

94%

* As of 17 February 2021.
Chair**	The remit of the former Ethics and Compliance Committee has been extended to sustainability matters in July 2020 and has been renamed Ethics, Compliance andSustainability Committee (“ECSC”).
*** To be re-elected in 2021.
The professional address of all Members of the Board of Directors for any matter relating to Airbus SE is Mendelweg 30, 2333 CS Leiden, The Netherlands.

GlobalBusinessEngineering& Technology

Manufacturing& Production

AerospaceIndustry

Finance& Audit

Geopolitical
Economics

DefenceIndustry

Information & DataManagement

Asia

Airbus SE / Report of the Board of Directors 202015

4. Corporate Governance /4.1 Management and Control

Changes in the composition of the Board in the course of 2020
Until 2020 AGM

From 2020 AGM*

Name

Age

StatusName

Age

StatusMr. Denis RANQUE

69

Independent

Mr. Mark DUNKERLEY

57

Independent

Mr. Hermann-Josef LAMBERTI

65

Independent

Mr. Stephan GEMKOW

61

Independent* Further information on the Board members can be found in the above table “Airbus SE Board of Directors until AGM 2021”.

Changes in the Board Committee composition in the course of 2020
Until 2020 AGM
Committee

From 2020 AGM*

Name

StatusName

StatusMr. Hermann-Josef LAMBERTIMemberMr. Mark DUNKERLEY

MemberMr. René OBERMANN

MemberMr. Stephan GEMKOWMemberAudit

Mr. Denis RANQUE
Ethics, Complianceand Sustainability

Mr. Jean-Pierre CLAMADIEU

Mr. Hermann-Josef LAMBERTIMemberMr. René OBERMANN

MemberMr. Jean-Pierre CLAMADIEU**

Member*	Further information on the Committee members can be found in the above tables “Airbus SE Board of Directors until AGM 2021” and “Changes in the Board Committee
composition in the course of 2020”.
**	Mr. Jean-Pierre Clamadieu replaced Mr. Denis Ranque as Chair of the Ethics, Compliance and Sustainability Committee from AGM 2020.
Chair

The Board of Directors makes sure it has the required mix
of experience, qualifications, skills and industrial knowledge
necessary to assist the Company in formulating and achieving
its overall strategy, together with the specific expertise required
to fulfil the duties assigned to him or her as Member of one of
the Board of Directors’ committees. The Board of Directors also
believes that a diverse composition among its Members withrespect to gender, experience, national origin, etc. is valuablefor the quality and efficiency of its work.

the overall financial situation of the Company with a strong focus
on funding needs and cash management. In order to ensure
the necessary financial flexibility to cope with important cash
requirements related to COVID-19, the Board of Directors decided
to withdraw the 2019 dividend proposal before the 2020 AGM
and suspend the voluntary top up in pension funding.

4.1.2 Operation of the Boardof Directors in 2020

For Defence and Space, it concerned notably the progress on
the Eurodrone and the Future Combat Air System programmes
and the challenges faced on the Space side. For the Helicoptersbusiness, the Board of Directors focused its review on the overallmarket situation that contracted in the COVID-19 crisis context
and the support and services activities that remained strong
despite the circumstances.

Board of Directors Meetings
Due to the exceptional circumstances, the Board of Directors
met 13 times during 2020 and was frequently informed ofdevelopments through reports from the CEO, comprising regular
updates on the COVID-19 situation, including on the employees’
and Company’s health, as well as on the developments on thestrategic and operational activities. The average attendance rate
at these meetings was 97%.
In 2020, a substantial share of the Board of Directors activities was
directly or indirectly related to the COVID-19 crisis. Throughout
the year, the Board of Directors reviewed and discussed theoperational and commercial situation of programmes as well as

16

Airbus SE / Report of the Board of Directors 2020

For Commercial Aircraft, this comprised inter alia regular reviewsof market, sales, supply chain and productions status as well
as decisions taken in relation to Human Capital, including theCompany resizing measures imposed by the COVID-19 crisis.

The Board of Directors dedicated a full session in 2020 to thereview of key aspects of the Company’s strategy, including
the announced zero-emission flight ambition by 2035 as wellas additional time during other sessions to specific strategy
opportunities and projects.
Moreover, the Board of Directors reviewed the Company’s
financial results and forecasts and maintained an emphasison both Enterprise Risk Management (“ERM”) and internal
control. A particular focus was also made on cyber security

4. Corporate Governance /4.1 Management and Control

and sustainability initiatives, notably with the decision made by
the Board of Directors in July 2020 to extend the remit of theformer Ethics & Compliance Committee to sustainability matters,
encompassing Environment (including climate change), Human
Rights and Inclusion, Safety & Quality as well as Business Integrity(see paragraph 4.1.3 for further details).

limited added value considering the recent changes in the
Board of Directors composition – new Chairman and two new
Directors and the restrictions imposed by COVID-19. Therefore
in November 2020 an internal evaluation was carried out by the
Board of Directors based on an extensive questionnaire issued
by the General Counsel.

Following the settlements reached with the French, UK and US
authorities in January 2020 in relation to the Serious Fraud Office /Parquet National Financier / US Department of Justice / US
Department of State investigations, the Board of Directors andits Ethics, Compliance and Sustainability Committee remained
fully committed and provided full support throughout the year
to the post-settlement activities. The Board of Directors pays
close attention to the Company’s active engagement with
its shareholders to ensure that its approach to governance,compliance and sustainability are well understood and continues
to reflect shareholders’ expectations. The conclusion in 2020 ofthese investigations demonstrated Airbus’ strong motivation tocooperate with the relevant authorities and to implement stronger
reporting and compliance standards to prevent a re-occurrenceof such events. Despite recognising the improvements madeto the Company’s reporting and compliance standards, someshareholders opposed the proposals relating to the Board’s
discharge at the 2020 AGM. Opposing shareholders voiced
concern over Airbus’ previous practices. Their vote should not beinterpreted as an opposition to Airbus’ strengthened governanceand compliance standards.

The questionnaire primarily covered governance and Board of
Directors topics, Board of Directors and Committees functioning,
Board of Directors composition and selection process, dynamic
between Board of Directors and Management and amongst
Board Members, Board of Directors decision-making process,Committees’ contributions and Board Secretary support. To takecurrent events into account, a specific COVID-19 section wasadded.

The Board of Directors also reviewed and discussed other topics
of significant importance to the Company such as the measurestaken to mitigate a no-deal Brexit situation, the potential impactof the US elections, the reciprocal application of tariffs oncommercial aircraft being imported to and from the US and crisis
management matters.
Furthermore, the Board of Directors played a key role in the
succession planning of both the Chairman and Board Members
in preparation for the appointment of René Obermann as
Chairman of the Board in replacement of Denis Ranque and of theappointment of two new Non-Executive Directors, Mark Dunkerley
and Stephan Gemkow in April 2020. The Board of Directors
also worked on the top management succession planning andperformed talent reviews. The impact of the COVID-19 crisis on
the remuneration structure was also addressed and appropriate
actions taken accordingly.
Due to the COVID-19 crisis context, no off-site Board meeting washeld in 2020, preventing the Board of Directors from continuing
to visit industrial sites. More generally, the Board of Directors
met virtually several times due to confinement measures andtravel restrictions nevertheless without hampering the efficiency
of Board of Directors functioning.

Board Evaluation 2020
As a matter of principle, the Board of Directors implements acontinuous evaluation process based on a three-year cycle.
As part of this process, every three years, a formal evaluation of
the functioning of the Board of Directors and its Committees isconducted with the assistance of a third-party expert. In the year
succeeding such an outside evaluation, the Board of Directors
performs a self-evaluation and focuses on the implementationof the improvement action plan resulting from the third party
assessment. In the intervening second year, the General Counsel,
being also the Secretary of the Board of Directors, issues aquestionnaire and consults with Board Members to establish aninternal evaluation which is then discussed with Board Members.
The year 2020 would have been the start of a new cycle, but it
was decided to add to the previous cycle one exceptional year
without the support of a third party expert due to estimatedIn its 2020 internal evaluation, the Board of Directors confirmed
overall satisfaction with the progress made since the Board of
Directors evaluation of last year and the implementation of theactions carried forward from the “Improvement Action Plan”
recommended by Heidrick & Struggles, following the last formal
evaluation.
Whereas during 2019 an almost entirely new management
team was put in place making a remarkably encouraging startin its interactions with the Board of Directors, in 2020 the newly
nominated Chairman had to cope from the beginning with theenormous and far reaching impacts the COVID-19 pandemic
was imposing on the world and on the aeronautics industry
specifically. In this difficult context, the Company’s managementof the COVID-19 crisis was seen as appropriate. In addition,
the Company’s governance, dynamic and performance isviewed as satisfactory, with excellent relationships between
the Management, the Chairman and the Board Members.
The resulting limited interpersonal interactions between the
Board Members did not hamper an efficient decision-making
but impacted a smoother familiarisation between the new Board
Members.
The Board Members notably valued good Board meeting
preparation, suitable time allocation to agenda items as well as
satisfactory contributions of the Board Committees, elements
which greatly contribute to the Board of Directors’s efficiency.
In addition, the Board highlighted its collegial, cooperative andeffective functioning as a team. The Board of Directors expects
this trend to continue.
Following the last Board of Directors evaluation, the frequency ofparticipation of Top Management members to Board meetings
has significantly increased.
The Board of Directors has spent additional time on strategy
and Top Management succession planning, as well as on otherimportant matters for which discussions would need to becontinued such as digitalisation/industrialisation, cyber security/
IT, innovation, employee engagement, competitive environment
and market positioning, sustainability & environment and safety.
The remit of the Ethics & Compliance Committee was enlarged
in 2020 to include environment and sustainability matters.
The Directors underlined that the Board of Directors shouldin addition spend further dedicated time on geopoliticaldevelopments, business model evolution and portfolio
management. In addition, Executive Committee succession
planning is expected to be more extensively discussed by the
Remuneration, Nomination, Governance Committee and Board.
Finally, the Board Members expressed their overall satisfaction
with regards to the Board of Directors composition, selection andnomination process and highlighted the necessity to continue
with the process of the staggering board principle in orderto further develop the diversity of gender within the Board of
Directors.

Airbus SE / Report of the Board of Directors 202017

4. Corporate Governance /4.1 Management and Control

4.1.3 Board Committees
The Audit Committee
Pursuant to the Board Rules, the Audit Committee, which is
required to meet at least four times a year, makes recommendations
to the Board of Directors on the approval of the annual Financial
Statements and the interim accounts (Q1, H1, Q3), as well as theappointment of external auditors and the determination of theirremuneration. Moreover, the Audit Committee has responsibility
for verifying and making recommendations to the effect that theinternal and external audit activities are correctly directed, thatinternal controls are duly exercised and that these matters are
given due importance at meetings of the Board of Directors.
Thus, it discusses with the auditors their audit programme andthe results of the audit of the Financial Statements, and it monitors
the adequacy of the Company’s internal controls, accounting
policies and financial reporting. It also oversees the operation of
the Company’s ERM system and keeps a strong link to the Ethics,
Compliance and Sustainability Committee. For further details inthis regard, see “– 4.5: Enterprise Risk Management System”.
Please refer to Annex E of the Board Rules for a complete list of
responsibilities of the Audit Committee.
The Chairman of the Board of Directors and the CEO are invited toattend meetings of the Audit Committee. The CFO and the Head
Accounting Record to Report are requested to attend meetings
to present management proposals and to answer questions.
Furthermore, the Head of Corporate Audit & Forensic and theChief Ethics & Compliance Officer are requested to report to the
Audit Committee on a regular basis.
In 2020, this Committee met five times with an average attendance
rate of 100%. It fully performed all of the duties and discussed
all of the items described above. In particular, it performed
reviews of internal controls, corporate audit (including major
findings and audit plan for 2020) and accounts (i.e. 2019 fullyear accounts, 2020 Q1, H1 and Q3 accounts, 2020 forecasts,
specific provisions) and independence of external auditors.
In addition, regular ERM and Legal & Compliance updates were
presented to the Audit Committee and discussed in meetings.

The Ethics, Complianceand Sustainability Committee
To reinforce the role and involvement of the Board of Directors
on sustainability-related topics, the remit of the former Ethics& Compliance Committee established in 2017 was extended
to sustainability matters in July 2020. The Committee wasrenamed Ethics, Compliance and Sustainability Committee(“EC&S Committee” or “ECSC”) and the Board Rules havebeen amended accordingly. Pursuant to the revised Board
Rules, the main mission of the EC&S Committee is to assist
the Board of Directors in overseeing the Company’s culture
and commitment to ethical business, integrity and sustainability.
The EC&S Committee is empowered to monitor the Company’s
Ethics & Compliance programme, organisation and framework
in order to make sure that the Company’s Ethics & Compliancegovernance is effective (including all associated internal policies,
procedures and controls). This includes the areas of money
laundering and terrorist financing, fraud, bribery and corruption,
trade sanctions and export control, data privacy, procurement
and supply chain compliance and anti-competitive practices.
The EC&S Committee is also empowered to oversee theCompany’s sustainability strategy and effective governance andensure that sustainability related topics are taken into accountin the Company’s objectives and strategy.

18

Airbus SE / Report of the Board of Directors 2020

The EC&S Committee makes recommendations to the Boardof Directors and its Committees on all Ethics, Compliance or
Sustainability-related matters and is responsible for providing
to the Audit Committee any necessary disclosures on issues or
alleged ethical and compliance breaches that are financial andaccounting-related. The EC&S Committee maintains a reporting
line with the Chief Ethics & Compliance Officer, who is requested
to provide periodic reports on its activities.
The Chairman of the Audit Committee and the Chairman of the
RNGC are members of the EC&S Committee. Unless otherwise
decided by the EC&S Committee, the CEO and the Chairman of
the Board of Directors are invited to attend the meetings. From
time to time, independent external experts are also invited toattend EC&S Committee meetings.
The EC&S Committee is required to meet at least four times ayear. In 2020, the EC&S Committee met in total four times with anaverage attendance rate of 94%. All of the above described items
were discussed during the meetings and the EC&S Committee
fully performed all the above described duties. In particular,
following the settlements reached with the French, UK and US
authorities in January 2020 in relation to the Serious Fraud Office /Parquet National Financier / US Department of Justice / US
Department of State investigations, the Committee performed
regular reviews of the post settlements activities (including
compliance and export control updates). Notably, the ITAR
Special Compliance Officer appointed in 2020 under the Consent
Agreement with the US State Department was introduced to
the EC&S Committee and regular updates on his activities were
provided. The first EC&S Committee meeting under its extended
form took place in October 2020 during which a sustainability
strategic review was performed.

The Remuneration, Nomination
and Governance Committee
Pursuant to the Board Rules, besides its role described in
section 4.1.1 above, the RNGC consults with the CEO withrespect to proposals for the appointment of the members of
the Executive Committee, and makes recommendations to theBoard of Directors regarding the appointment of the Secretary to
the Board of Directors. The RNGC also makes recommendations
to the Board of Directors regarding succession planning (at Boardof Directors, Executive Committee and Senior Managementlevels), remuneration strategies and long-term remunerationplans. Furthermore, the RNGC decides on the service contracts
and other contractual matters in relation to the Members of theBoard of Directors and the Executive Committee. The rules andresponsibilities of the RNGC have been set out in the Board
Rules.
In addition, the RNGC reviews the Company’s top talent,
discusses measures to improve engagement and to promote
diversity, reviews the remuneration of the Executive Committee
Members, the Long-Term Incentive Plans (“LTIP”), and thevariable pay for the previous year.
Finally, the RNGC performs regular evaluations of the Company’s
corporate governance and makes proposals for changes to theBoard Rules or the Articles of Association.
The Chairman of the Board of Directors and the CEO areinvited to attend meetings of the RNGC. The Chief Human
Resources Officer (“CHRO”) is requested to attend meetings
to present management proposals and to answer questions.
The CEO leaves the meetings when the RNGC discusses his/her remuneration or personal situation.

4. Corporate Governance /4.2 Conflict of Interest

Pursuant to the Board Rules, the Chair of the RNGC automaticallyfulfils the function of “Lead Independent Director”. In this rolehe/she is responsible for (i) replacing the Chairman in his/herabsence at meetings of the Board of Directors, (ii) organising theannual appraisal of the Chairman’s performance by the Boardof Directors and (iii) acting as an intermediary for and between
the other Directors when necessary.
The RNGC is required to meet at least four times a year. In 2020,
it met four times with an attendance rate of 94%; it discussed
all of the above described items during the meetings and it
fully performed all of the above described duties. In particular,
the RNGC discussed the executive remuneration structure in
the COVID-19 context, the extension of the EC&S Committee
remit as described above and the revision of the Company’s
Insider Trading Rules to align with current market practice whileremaining compliant with applicable regulations. The RNGC also
worked on a 360 feedback exercise for the CEO and performed
in depth reviews of the Top Management succession plan andmore generally of key talents.

4.1.4 Executive Committee
Nomination
and Composition
The CEO proposes all the Members of the Executive Committeeof the Company (the “Executive Committee”) for approval by
the Board of Directors, after consultation with (i) the Chairmanof the RNGC and (ii) the Chairman of the Board of Directors,
applying the following principles:–– the preference for the best candidate for the position;–– the maintenance, in respect of the number of Members of the
Executive Committee, of the observed balance among thenationalities of the candidates in respect of the location of themain industrial centres of the Company (in particular among thenationals of France, Germany, Spain and the United Kingdom,
where these main industrial centres are located); and–– at least two-thirds of the Members of the Executive Committee,
including the CEO and the CFO, being EU nationals andresidents.

Role of CEO and Executive Committee
The CEO is responsible for executing the strategy, as approvedby the Board of Directors, and for managing the day-to-day
operations of the Company’s business with the support of the
Executive Committee (“EC”) and its executive leadership teamthrough Executive Leadership Meetings (“ELM”) to which the
EC members participate. The CEO shall be accountable for theproper execution of the day-to-day operations of the Company’sbusiness.
ELMs are held on a regular basis and aim at advising the CEOon his day-to-day role and ensuring that EC members reportback on business progress, updates and concerns, addressing
Company-wide topics including corporate matters, approving all
vacancies and promotions above certain levels.
The EC further supports the CEO in performing these tasks. Under
the leadership of the CEO, the EC is responsible for businessstrategy as well as organisational matters and managementof the business, monitoring key projects/ products and major
investments, overseeing performance targets, whether it befinancial, individual, programmes or support functions, outlining
policies to motivate, recruit and retain employees. It is also
accountable for regulatory and statutory obligations along with
policy matters, communications and market disclosures. It isalso the forum where the information or requests for approvaldestined to the Board of Directors are discussed and approved.
The EC members shall jointly contribute to the overall interests of
the Company, in addition to each member’s individual operationalor functional responsibility within the Company.
The EC comprises the heads of the Divisions and key functionsof the Company.
The CEO is the only Executive Director within the Board of
Directors and represents the Company on the Board of Directors.
Depending on the topic, he usually asks the responsible EC
member to join him at Board meetings to present the financials(CFO), programme/product topics (Division heads), HR matters(CHRO) or any other topic where a specialist is needed.
This approach allows the Board Members to get to know theEC members and equips them to make judgements when it
comes to decisions about key positions.

4.2 Conflict of Interest
Conflict of Interest
The Company has a conflict of interest policy, which sets outthat any potential or actual conflict of interest between the
Company and any Member of the Board of Directors shall be
disclosed and where possible, avoided (please refer to the“Board Rules (Annex D – Article 8: Conflicts of interest)”). This
policy is available on the Company’s website: www.airbus.com(Company / Corporate Governance / Governance Frameworkand Documents), as is the related best principle 2.7 of the Dutch
Code (as such term is defined in section 4.3 “Dutch Corporate
Governance Code” below), which the Company complied withduring 2020. Pursuant to the Articles of Association and the Board

Rules, a conflicted Member of the Board of Directors should
abstain from participating in the deliberation and decision‑making
process relating to the matters concerned. The Board of Directors
must approve any decision to enter a transaction where a Director
has conflicts of interest that are material to the Company or theindividual Director.
In 2020, no transactions were reported. There were, however,related-party transactions: for an overview, please refer to “Notes
to the IFRS Consolidated Financial Statements – Note 10: Related
Party Transactions”.

Airbus SE / Report of the Board of Directors 202019

4. Corporate Governance /4.3 Dutch Corporate Governance Code

4.3 Dutch Corporate Governance CodeIn accordance with Dutch law and with the provisions of the
Dutch Code, which includes a number of non-mandatory
recommendations, the Company either applies the provisionsof the Dutch Code or if applicable, explains and gives soundreasons for why they have not been applied.
On 8 December 2016, the Dutch Code was revised; its updated
recommendations apply to financial years starting on or after
1 January 2017. The Company welcomed the updates to the
Dutch Code and continues supporting its emphasis on topics
such as long-term value creation and the importance of culture.
While the Company, in its continuous efforts to adhere
to the highest standards, applies nearly all of the current
recommendations of the Dutch Code, it must, in accordance withthe “comply or explain” principle, provide the explanations below.
For the full text of the Dutch Code, please refer to:www.commissiecorporategovernance.nl.
For the financial year 2020, and in respect of compliance with
the Dutch Code, the Company states the following:
1. Securities in the Company as Long-Term Investment
Provision 3.3.3 of the Dutch Code recommends that
Non‑Executive Directors who hold securities in the Company
should keep them as a long-term investment.
Although Non-Executive Directors are welcome to own sharesin Airbus SE, the Company does not require its Non-Executive
Directors who hold shares to keep them as a long-term investment.
The Company considers it is altogether unclear whether shareownership by Non-Executive Directors constitutes a factor of
virtuous alignment with stakeholder interest or may be a sourceof bias against objective decisions.
Provision of 3.1.2 vi of the Dutch Code recommends that the sharesawarded to the CEO are held for at least five years after they areawarded. The rules applicable within the Company (as describedin section 4.4.2 B e) below) do not impose a minimum of five
year holding period for awarded shares; however, the Company
believes that potential deviations from this recommendation are
significantly limited by the share ownership guideline set forthin section 4.4.2 B f), under which the CEO is expected to holdthroughout his/her tenure Airbus SE shares with a value equal
to 200% of his/her Base Salary.
2. Dealings with Analysts
Provision 4.2.3 of the Dutch Code recommends meetings withanalysts, presentations to analysts, presentations to investors andinstitutional investors and press conferences shall be announced
in advance on the Company’s website and by means of press

releases. In addition, it recommends that provisions shall be madefor all shareholders to follow these meetings and presentations
in real time, and that after the meetings the presentations shallbe posted on the Company’s website.
The Company does not always allow shareholders to follow
meetings with analysts in real time. However, the Company
ensures that all shareholders and other parties in the financial
markets are provided with equal and simultaneous information
about matters that may influence the share price.
3. Gender Diversity
The composition guidelines regarding gender diversity underDutch law pursuant designed to ensure that the Board of
Directors is composed in a balanced way if it contained at least
30% women and at least 30% men expired on 1 January 2020.
A replacement legislative proposal regarding gender diversity
rules is currently under discussion. The proportion of the female
representation on the Board of Directors is currently at 25%.
The Company will in any event continue to promote gender
diversity within its Board of Directors in accordance with theprinciples mentioned in section 4.1.1 above. In addition, theCompany will continue to give due consideration to any applicablegender targets in its search to find suitable Board candidates
and to actively seek female candidates. However, the Company
believes that candidates should not be recruited based on theirgender alone; the capabilities and skills of potential candidates
are most important in this respect.
Therefore, the importance of diversity, in and of itself, should
not set aside the overriding principle that someone should berecommended, nominated and appointed for being “the right
person for the job”.
The Company values diversity in the broadest sense, ranging
from gender to ethnicity. To this end, the Company is committed
to promoting, supporting and leveraging initiatives to increase
the diversity within its workforce, as well as at top management
and Board levels. With the support of stakeholder input, theCompany is diligently working on building a pipeline of suitable
candidates. Through these dedicated programmes, theCompany is confident of notably improving gender diversity
within a reasonable timeframe. Although the Company has not
set specific targets with respect to particular elements of diversity,
except for the principles described in “– 4.4.1: Composition,
powers and rules” and those targets which apply by law, theCompany considers attributes such as personal background,age, gender, national origin, experience, capabilities and skills
when evaluating new candidates in the best interests of theCompany and its stakeholders.

For information on the operation of the Shareholders’ Meeting, its key powers, the shareholders’ rights and how such powers andrights can be exercised, see “– 3.1: Shareholding and voting rights – right to attend Shareholders’ Meetings”.
For information on the composition and operation of the Board of Directors and its respective committees, see “– 4.1.1: Composition,
power and rules”, “– 4.1.2: Operation of the Board of Directors in 2020”, and “– 4.1.3: Board Committees”.
For information on (i) significant direct and indirect shareholdings, (ii) holders of shares with special control rights, (iii) rules governing
appointment and dismissal of Directors, (iv) amendments to the Articles of Association, and (v) the delegation to the Board of Directorsof the power to issue or buy back shares, see “– 3.1: Shareholding and voting rights – Shareholding structure at the end of 2020”,“– 3.2: Relationships with Principal Shareholders”, “– 4.1.1: Composition, powers and rules”, “– 3.1: Shareholding and voting rights– Amendments to the Articles of Association” and “– 3.1: Shareholding and voting rights – Modification of share capital or rights
attached to shares”.

20

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Report

4.4 Remuneration Report
4.4.1 Introduction
The RNGC, comprised solely of independent Non-Executive
Members of the Board of Directors, is pleased to present the
Remuneration Report which comprises the following sections:Paragraph 4.4.2 presents the proposed Company’s remuneration
policy (“Remuneration Policy”) as adopted by the AGM held in2020 and applicable since 1 January 2020.
Paragraphs 4.4.3 and 4.4.4 respectively describe how the
Remuneration Policy was implemented in 2020 in respect of
the CEO and of the Non-Executive Members of the Board of
Directors.
As a reminder, the AGM held in 2020 supported the implementationof the Remuneration Policy during the financial year 2019 throughthe approval of resolution 7 with a very high level of votes casted
in favour. Therefore, the RNGC did not propose any changes
based on this shareholders’ vote.

The Remuneration Policy shall be posted on the Company’s
website as part of the Company’s annual report of the Boardof Directors.

B—E xecutive Remuneration –Applicable to the CEOa) Remuneration Philosophy
The Company’s remuneration philosophy aims to provide
remuneration that will attract, retain and motivate high-calibre
executives, whose contribution will ensure that the Company
achieves its strategic and operational objectives, thereby
delivering long-term sustainable returns for all shareholders andother stakeholders in a manner consistent with the Company’s
identity, mission and corporate values.

Note: Whilst this chapter 4.4 is presented as the Company’s
Remuneration Report, only the disclosure included in(or expressly incorporated by reference into) this paragraph 4.4.1
and paragraphs 4.4.3 and 4.4.4 constitute the remuneration
report (bezoldigingsverslag) for purposes of Section 2:135b of
the Dutch Civil Code and will be included as a separate agenda
item for an advisory vote at the AGM 2021.

The Board of Directors and the RNGC are committed to making
sure that the Executive remuneration structure (i) is transparent
and comprehensive for all stakeholders, (ii) is consistent andaligned with the interests of long-term shareholders, also taking
into consideration the employment conditions of the Company’s
employees and (iii) incentivises further the Company’s corporate
values by basing variable remuneration components also on
the achievement of non-financial targets and metrics using
environmental, social or governance criteria via the Responsibility
and Sustainability (“R&S”) performance measure.

The cumulated remuneration of all Executive Committee
Members is presented in the “Notes to the IFRS Consolidated
Financial Statements – Note 34: Remuneration”. To the extent that
any information presented in this Note relates to matters referred
to in Sections 2:383c through 2:383e of the Dutch Civil Codeand is not also described in paragraph 4.4.3, such information isincorporated by reference into this Remuneration Report in orderto satisfy the requirements of the Dutch Civil Code.

Before setting the targets to be proposed for adoption by the
Board of Directors, the RNGC considers the financial outcome
scenarios of meeting performance targets, including achieving
maximum performance thresholds, and how these may affectthe level and structure of the Executive remuneration, as well as
potential risks for the Company’s business which may result fromvariable compensation. The Board of Directors shall also consider
these aspects, based on the RNGC’s recommendations.

4.4.2 Remuneration Policy

Also, before making a recommendation relating to the
remuneration of the CEO, the RNGC and the Board of Directors
shall take note of the views of the CEO with regard to the amount,level and structure of his or her remuneration.

A — General
The Remuneration Policy covers all Members of the Board of
Directors: the CEO (who is the only Executive Director) and theother Members of the Board of Directors (who are the NonExecutive Directors).
Pursuant to a resolution to that effect, the General Meetingmay (re)adopt, amend or supplement the Remuneration Policyon the basis of a proposal by the Board of Directors at therecommendation of the RNGC.
The Board of Directors, at the recommendation of the RNGC,
may decide to deviate temporarily (and ultimately until the General
Meeting adopts an amended version of the Remuneration Policy
following the occurrence of such deviation) from any element of
the Remuneration Policy as outlined below, if this is necessary toserve the long-term interests and sustainability of the Company
or to assure its viability.
The Remuneration Policy in the form set out below in thischapter 4.4.2 has been adopted by the AGM held in 2020 witheffect as of 1 January 2020. Given the robust structure of theRemuneration Policy, which was recognised by the positive
outcome (with a very high score) of the most recent vote at
the Company’s general meeting on the Remuneration Policy,
the Board of Directors does not believe that amendments to theRemuneration Policy are required this year.

b) Total Direct Compensation and Peer group
The CEO’s total direct compensation (“Total Direct
Compensation”) comprises a base remuneration (“BaseSalary”), an annual variable short-term remuneration (“Annual
Variable Remuneration” or “VR”) and a LTIP. The three elementsof the Total Direct Compensation are each intended to comprise
one-third of the total, assuming the achievement of performance
conditions is 100% of the applicable targets.
The level of the Total Direct Compensation for the CEO (BaseSalary, VR and LTIP) is set by reference to the median of an
extensive peer group (as described in paragraph 4.4.4 itema) below) and takes into account the scope of the role of the
CEO and the level and structure of executive rewards within
the Company. The benchmark is regularly reviewed by the RNGC
with the support of an independent consultant and is based ona peer group which comprises:–– global companies in the Company’s main markets (France,
Germany, UK and US), excluding financial institutions; and–– companies operating in the same industries as the Company
worldwide.

Airbus SE / Report of the Board of Directors 202021

4. Corporate Governance /4.4 Remuneration Report

The elements of the Total Direct Compensation are described below:
Remuneration Element

Main Drivers

Performance Measures

Target and Maximum

Base Salary

Reflects market valueof position.

Not applicable

1/3 of Total Direct Compensation(when performance achievement
is 100% of target).

Variable
Remuneration

Rewards annual
performance basedon achievement ofCompany performancemeasures and individual
objectives.

LTIP

Rewards long-term
commitment andCompany performance,and engagement basedon financial targets
aligned with long-term
objectives subject tocumulative performanceover a 3-year period.

Collective (50% of VR): divided
between EBIT (1) (40%);
Free Cash Flow (2) (40%)
and R&S (20%).
Individual (50% of VR): Achievementof annual individual objectives,
divided between Outcomes
and Behaviour.
Vesting ranges from 0% to 150%
of initial grant, subject toperformance over a three-year
period. In principle, no vesting
if cumulative EBIT is negative.
If cumulative EBIT is positive,
vesting from 50% to 150%
of grant based on EPS (75%)
and Free Cash Flow (25%).

The VR is targeted at 100%of Base Salary for the CEO anddepending on the performance assessment,
ranges from 0% to 200% of target.
The VR is capped at 200% of Base Salary.

The original allocation to the CEO is capped
at 100% of Base Salary at the time of grant.

---

The following caps apply
to Performance Units:
overall pay-out is capped at a maximumof 250% of the original value at the dateof grant;
the value that could result from shareprice increases is capped at 200% of thereference share price at the date of grant.

(1) The Company continues to use the term EBIT (earnings before interest and taxes). It is identical to Profit before finance cost and income taxes as defined by IFRS Rules.
(2) Airbus defines the alternative performance measure FCF as the sum of (i) cash provided by operating activities and (ii) cash used for investing activities, less (iii) change of securities,(iv) contribution to plan assets for pension schemes, (v) realised treasury swaps and (vi) bank activities. It is a key indicator which allows the Company to measure the amount ofcash flow generated from operations after cash used in investing activities.

The following graphic depicts three relevant scenarios for the outcome of the Total Direct Compensation:

Below Threshold
TargetMaximum
0Base Salary

1

2

3

Variable Remuneration (VR)4

5

LTI paid in cash

6

7

8

LTI paid in shares

Indications assume a Base Salary of € 1.35 million, but the Board of Directors may revise the Base Salary based on the recommendationsof the RNGC.
“Below Threshold” includes annual Base Salary; VR at 0%; LTIP not vesting.
“Target” includes Base Salary, VR at target and LTIP grant face value in cash and in shares.
“Maximum” includes Base Salary; maximum VR value (200% of VR at target); maximum LTIP cash grant projected at vesting date
(250% of grant value); maximum performance applicable to the number of shares granted (150%). The final value of Performance
Shares depends on the share price development which is not capped.

22

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Reportc) Base Salary
The CEO’s Base Salary is determined by the Board of Directors, taking into account the peer group analysis mentioned above.

d) Annual Variable Remuneration
The Variable Remuneration is a cash payment that is paid following the end of each financial year, depending on the achievement ofspecific and challenging performance targets as determined at the beginning of each financial year. The level of the CEO’s Variable
Remuneration is targeted at 100% of the Base Salary; it is capped at a maximum level of 200% of the Base Salary. The entire
variable remuneration is at-risk, and therefore if performance targets are not achieved as per the defined objectives agreed by the
Board of Directors, no variable remuneration is paid.
The performance measures that are considered when awarding the variable remuneration to the CEO are split between common
collective performance measures and individual performance measures.

Common Collective Component
The common collective component is based on earnings before interest and taxes (“EBIT”) (40%), Free Cash Flow (40%) and R&S(20%) objectives (the “Common Collective Component”). At the beginning of each year, the Board of Directors sets the targets
for these key value drivers at Company and Division levels. The common collective targets relate closely to internal planning andto guidance given to the capital markets (although there may be variations from these). The key value drivers that form the R&Scomponent will be determined by the Board of Directors and disclosed in the implementation section of the Company’s remuneration
report for the relevant financial year. They can be related to matters such as health & safety, climate and/or people.
To calculate the common collective annual achievement levels, actual EBIT, Free Cash Flow and R&S performance is comparedagainst the targets that were set for the year. This comparison forms the basis for computing achievement levels, noting that theactual EBIT, Free Cash Flow levels are occasionally normalised for a limited number of factors which are outside management’s
control (such as certain foreign exchange impacts or unplanned merger and acquisition activities). The RNGC’s intention is to ensure
ambitious financial and R&S targets and to incentivise the CEO’s commitment to meeting these targets.
The graphic below illustrates the Common Collective Component, how it is measured and what the key value drivers are:

FCF (Free Cash Flow)
Annual, M€ (40%)

EBIT (Earnings before Interest & Tax)
Annual, M€ (40%)
Measures operational profitability
Driven by revenues and operating
expenses

Measures cash generation
Driven by cash provided by/used for operating
and investment activities

AirbusExecutives
commoncollective
financial
targets

R&S
Annual, % (20%)
Criteria giving effect to the R&S component
could be related to health & safety, climate
and/or people

Individual Component
The individual element (“Individual Component”) focuses on Outcomes and Behaviour (as defined below). Individual performanceis assessed in these two important dimensions, which both contribute to the Company’s remuneration philosophy. Among othermatters, corporate social responsibility and the Company’s corporate values are considered as part of this assessment:–– Outcomes encompass various aspects of what the CEO can do to contribute to the success of the business: specific businessresults he achieves, projects he drives and processes he improves. The individual targets of the CEO are comprehensive andshared with all employees via the Top Company Objectives.
–– Behaviour refers to the way results have been achieved, which is also critical for long-term success: how the CEO and theBoard of Directors work as a team, how the CEO leads the Executive Committee, quality of communication, encouragement ofinnovation, etc. A specific part of the behaviour assessment relates to Ethics, Compliance, Quality and other Sustainability matters.

Airbus SE / Report of the Board of Directors 202023

4. Corporate Governance /4.4 Remuneration Report

The performance of the Individual Component is measured by the RNGC for the CEO and for all the other members of the Executive
Committee.
The RNGC discusses the level of achievement of every single target and derives a combined target achievement level for the outcomes.
The behavioural part of the Individual Component is also discussed by the RNGC and constitutes an adjustment factor for the target
achievement of the outcomes. Finally, the RNGC proposes to the Board of Directors the compound Individual Component of the
CEO target achievement made up from the outcomes and behavioural achievements.

e) Long-Term Incentive Plan
The CEO participates in the Company’s LTIP in order to increase the alignment with shareholders’ interests. The LTIP allows theaward of Performance Units (“Performance Units” or “Units”) and/or Performance Shares (“Performance Shares” or “Shares”).
The value of the CEO’s LTIP allocation is capped at 100% of the Base Salary at the date of grant and subject to performance
conditions. The achievement of the performance criteria is assessed by the RNGC after a three-year period based on relevant
financial criteria during this period of three years with stringent targets set in advance and agreed by the Board of Directors at therecommendation of the RNGC.
At the end of this three-year period, the grant is subject to a performance calculation to determine whether and to what extent
it should vest. Depending on this calculation (i) Performance Units will vest in two tranches, the payment of which takes placeapproximately 6 and 18 months following the end of the performance period and (ii) Performance Shares will vest in one tranche,
approximately six months following the end of the performance period. This is depicted in the graphic below:

Performance calculation
determines the number of Unitsand Shares that may vest

GRANT DATE
Face value at grant date
Allocation policy

Y

Y+1

Y+2

Y+4

Y+5

Vesting in CASH

X

X

Vesting in SHARES

X

Y+3

Performance period 3 years

The level of vesting of Performance Shares and Units is subject to the following performance measures:–– 0-50% of the allocation: In principle, this element of the Performance Unit/Share award will not vest if the Company reports
negative cumulated EBIT results. Nonetheless, in case the Company’s EBIT results are impacted by exceptional and unpredictable
circumstances, the Board of Directors, upon recommendation of the RNGC, may decide that a maximum portion of 50% of theallocation will vest;–– 50-150% of the allocation: This element of the Performance Unit/Shares vests based on the two following performance criteria:
average earnings per share (75%) (“Earnings per Share” or “EPS”) and cumulative Free Cash Flow (25%).

Earnings per Share (75%)
Average over 3 years, €Measures profitability
Driven by net income and number of shares

Free Cash Flow (25%)
Cumulated over 3 years, M€
Measures cash generation
Driven by cash provided by/used
for operating and investment activities

The vesting of Performance Units and Shares is subject to the following maximum cap:–– the maximum level of vesting is 150% of the number of Units/Shares granted.
The vesting of Performance Units is subject to the following maximum caps:–– the value that could result from share price increases is capped at 200% of the reference share price at the date of grant; and–– the overall pay-out is capped at 250% of the value at the date of grant.
Performance Units and Performance Shares that vest in accordance with the terms and conditions applicable to them are settled
without further action being required by the beneficiary.
For each payment in cash, one Unit is equal to the value of one Company share at the time of vesting. The Company share value
is the average of the opening share price, on the Paris Stock Exchange, during the 20 trading days preceding and including therespective vesting dates.

24

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Reportf) Share Ownership Guideline
The Board of Directors has established a share ownershipguideline pursuant to which the CEO is expected to acquire
Airbus SE shares with a value equal to 200% of the Base Salaryand to hold them throughout his or her tenure.

g) Benefits
The benefits offered to the CEO are similar to the benefits granted
to other executives of the Company and comprise, among othermatters, medical, death and disability coverage (both througha social security system or a company plan, depending on thecontractual agreement with the CEO), a company car and usual
facilities.
Unless the law provides otherwise, the costs and expenses of
the CEO are covered, including reasonable costs of defending
claims, under the conditions set forth in the insurance policy
subscribed by the Company. Under circumstances excluded by
the insurance policy, such as an act or failure to act by the CEO
that can be characterised as intentional, intentionally reckless, orseriously culpable, there will be no entitlement to any coverage.

h) Retirement
The CEO is entitled to retirement benefits through mandatory
applicable state and collective pension plans.
The CEO participates also in a Company pension contributions
based plan. This plan consists of an annual pension contributionof 20% of the annual pensionable remuneration (as describedin paragraph 4.4.3 item h) below) subject to applicable local
practices (if any).

i) Clawback
In accordance with Dutch law, the Board of Directors may
adjust a “bonus” (as defined under Dutch law, including shortterm remuneration and awards under the Long-Term Incentive
Plan subject to performance criteria) awarded to the CEO toa suitable level, if payment or satisfaction of that bonus would
be unacceptable under the standards of reasonableness andfairness. Also, the Company may reclaim a bonus already paid,
in whole or in part subject to applicable local legal requirements
if any, to the extent that such payment was made on the basisof incorrect information regarding the achievement of thetargets, objectives and/or conditions underlying the bonus orregarding the circumstances on which the bonus was dependent.
The Non‑Executive Directors, or a special representative
designated by the General Meeting, may demand such repaymenton the Company’s behalf.
Any such adjustment or clawback will be reported in the notesof the relevant Financial Statements of the Company.

j) Loans
The Company does not provide loans or advances to the CEO.

k) Severance
In case of termination of the CEO’s duties at the initiative of theBoard of Directors, the CEO shall be entitled to an indemnity
equal to one (1) time the last Total Annual Remuneration(defined as Base Salary and VR most recently paid) subject
to applicable local legal requirements if any, and provided thatthe performance conditions (as described in paragraph 4.4.3
item k) below) assessed by the Board of Directors have been
fulfilled. If the CEO’s appointment as member of the Board of
Directors terminates within a period of 12 months or less prior to
his retirement date, the termination indemnity will be limited by
pro-rating its amount. This will not apply if the CEO’s mandate

is terminated for cause (misconduct), in case of resignation or
termination on or after his retirement date.
The CEO’s appointment terms and conditions include a noncompete clause, which applies for a maximum of one year. The
compensation under the non-compete clause is equal to 50%of the last Total Annual Remuneration (defined as Base Salaryand VR most recently paid) subject to applicable local legal
requirements if any and paid in monthly instalments.
Past LTIP awards may be maintained, in such cases as in the caseof retirement or if a mandate is not renewed by the Company fora reason other than cause (misconduct). The vesting of past LTIP
awards follows the rules and regulations of the LTIP including
performance conditions and is not accelerated in any case. LTIP
awards are forfeited for executives who leave the Company attheir own initiative, but this is subject to review by the Board of
Directors.
The term of the CEO’s appointment is linked to his or her mandate
as member of the Board of Directors. The termination of the
CEO’s appointment may be subject to a notice period of six
months, except if the CEO’s appointment is terminated for cause(misconduct), in which case the CEO’s appointment may beterminated immediately, or in case of non-renewal of the CEO’s
mandate by the General Meeting.

C — Non-Executive Remuneration –Applicable to Non-Executive
Directors
The Company’s Remuneration Policy with regard to NonExecutive Directors aims at ensuring fair compensation andprotecting the independence of the Board’s Members. Theirremuneration should be commensurate to the time spent andthe responsibilities of their role on the Board of Directors.

Fees and Entitlements
Non-Executive Directors are entitled to the following remuneration
components:–– a base fee for membership or chair of the Board of Directors;–– a Committee fee for membership or chair on each of theBoard’s Committees;–– an attendance fee for the attendance of Board meetings(subject to such conditions as may be imposed by the Boardof Directors at the recommendation of the RNGC); and–– an attendance fee for the attendance of Committee meetings
if and when such Committees would have more than fourCommittee meetings per year (whether these meetings areheld physically or by phone).
Each of these fees is a fixed amount that is determined by the
Board of Directors from time to time, at the recommendationof the RNGC.
Committee chairmanship and Committee membership fees are
cumulative if the concerned Non-Executive Director belongs to
two different Committees. Fees are paid twice a year at the end ofeach semester (as close as possible to the Board meeting dates).
Non-Executive Directors do not receive any performance orequity- related compensation, and do not accrue pension rights
with the Company in the frame of their mandate, except what theywould receive in the frame of a current or past executive mandate.
These measures are designed to ensure the independence ofBoard Members and strengthen the overall effectiveness of theCompany’s corporate governance.
The Company does not encourage Non-Executive Directors topurchase Airbus SE shares.

Airbus SE / Report of the Board of Directors 202025

4. Corporate Governance /4.4 Remuneration Report

The Company does not provide loans or advances to the
Non‑Executive Directors.
Unless the law provides otherwise, the Non-Executive Directors
shall be reimbursed by the Company for various costs andexpenses, including reasonable costs of defending claims.
Under certain circumstances, such as an act or failure to act by
a Member of the Board of Directors that can be characterised
as intentional, intentionally reckless, or seriously culpable, there
will be no entitlement to this reimbursement.

4.4.3 Implementationof the Remuneration
Policy in 2020: CEOThis paragraph 4.4.3 describes how the Remuneration Policy
was implemented in 2020 with respect to the CEO (Mr GuillaumeFaury). As a reminder, the AGM held in 2020 approved theRemuneration Policy through resolution 6 with a very high levelof support.
In line with the Remuneration Policy and the expectation of the
RNGC and the Board of Directors, the policy is intended to resultin a remuneration that will retain and motivate a high-calibre
executive, while taking into account best practices as well as
employee and shareholder considerations. It should help toensure that the Company achieves its strategic and operational
objectives, thereby delivering long-term sustainable returns forall shareholders and other stakeholders in a manner consistent
with the Company’s identity, mission and corporate values.
For the reasons indicated in the Board Report issued in 2020, theimpact of the penalties resulting from the settlements reached in
January 2020, with the French Parquet National Financier (“PNF”),
the U.K. Serious Fraud Office (“SFO”), and the US Departmentof Justice (“DoJ”) resolving the authorities’ investigations havenot been considered in the assessment of the 2019 Variable
Remuneration, and will not be considered in the assessment of
the ongoing and future incentive plans.

The CEO’s remuneration for the year 2020 has been impacted
by the COVID-19 crisis (including the impact on the Variable
Remuneration, as further detailed below as any employee
having a Common Collective Component in her/his Variable
Remuneration, and the absence of dividend payments in relation
to Airbus SE shares as any other shareholder) without need foradaptation of the Remuneration Policy due to the exceptional
circumstances, as confirmed by the Board of Directors uponrecommendation of the RNGC. It has proved to be in line with theexperience of the stakeholders. Furthermore, the CEO decided to
donate the equivalent of his 2019 Annual Variable Remuneration
paid in 2020 to non-governmental organisations (“NGOs”) andhumanitarian organisations, predominantly the partners of the
Airbus Foundation and the Airbus Foundation itself.

a) Benchmarking
The latest benchmarks performed in the last years were based on
the relevant peer group composed of 76 companies (1) selectedfrom CAC40 in France, DAX 30 in Germany, FTSE 100 in the UK
and DJ 30 in the US as well as large European companies having
comparable economic indicators such as revenues, number of
employees and market capitalisation. Financial institutions were
excluded from the peer group.
Based on a review performed by the RNGC in the last years
with the assistance of an independent consultant, Willis
Towers Watson, it was concluded that the CEO’s Total Direct
Compensation was at the median level of the peer group as
defined in paragraph 4.4.2.B item (b) above.
In addition to external benchmark, the RNGC considers also the
remuneration of employees through the review of the evolutionof the pay-ratio (see 4.4.3 item (j)).

b) Base Salary
The CEO’s Base Salary level on a full year basis is unchanged
compared to 2019 and amounts to € 1,350,000 (lowered fromthe Base Salary of the former CEO: € 1,500,000).

(1) France: Air Liquide, Michelin, PSA, Renault, Saint-Gobain, Sanofi, Schneider Electric
Germany: BASF SE, Bayer Aktiengesellschaft Bayerische Motoren Werke Aktiengesellschaft, Daimler AG, Deutsche Lufthansa, Deutsche Post AG, Deutsche
Telekom AG, E.ON SE, Henkel AG & Co., RWE Aktiengesellschaft, Siemens Aktiengesellschaft, Thyssen Krupp AG
UK: Anglo American, BP, GlaxoSmithKline, Glencore, Imperial Tobacco, Rio Tinto, Rolls-Royce, Royal Dutch Shell, Unilever
Spain: Acciona, Amadeus, Dia, Enagás, Endesa, Ferrovial, IAG, Meliá Hotels, Naturgy (Gas Natural Fenosa), Repsol, Telefónica
US: Alcoa, Altria, American International Group, Amgen, AT&T, Bechtel Nuclear, Security & Environmental, Best Buy, Cisco Systems, Coca-Cola, Colgate-Palmolive,
Comcast, CVS Health, DuPont, GE Aviation, GE Healthcare, General Dynamics, General Motors, Hewlett-Packard, Honeywell, IBM, Ingersoll Rand, Intel, Johnson& Johnson Kimberly- Clark, L3 Technologies, Lockheed Martin, McDonald’s, Microsoft, Northrop Grumman, Target, United Technologies, Wal-Mart, Walt Disney26

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Reportc) Annual Variable Remuneration
As stipulated in the Company’s Remuneration Policy, the CEO’s VR is targeted at 100% of the Base Salary and capped at 200%of the Base Salary. It is subject to the fulfilment of collective and individual performance targets.
For 2020, the VR of the CEO amounts to an aggregate of € 1,404,000 composed of € 391,500 (58%) for the Common Collective
Component and € 1,012,500 (150%) for the Individual Component.

Variable
Remunerationof CEO in 2020:€ 1,404,000

Individual part:€ 1,012,500
Achievement:
150%

Common Collective
Component:€ 391,500
Achievement:
58%

Performance Achievement – Common Collective Component
According to the policy applicable for the financial year 2020, the Common Collective Component for the Company consolidated
achievement amounts to 58%. It is based on an achievement of 20% of target EBIT, 27% of target Free Cash Flow, and 200%of target R&S. These criteria apply to all executives having a Common Collective Component in their variable remuneration.
As one of the Company’s priorities is to provide a safe and inclusive working environment, it was decided early 2020 that the R&S
target for 2020 should be a 15% reduction in Airbus’ accident frequency rate (measured by the rolling Lost Time Injury Frequency
rate (“FR1”) which is the monthly number of lost time injuries per million worked hours averaged over 12 months) compared to 2019.
Safety is reviewed across the whole group as further detailed in the Health and Safety section 1.1.7 b) and Airbus’ FR1 performanceis reported on a monthly basis to the CEO for his health and safety review.

EBIT

20%

FCF

27%

= 58%
200%

R&S (FR1)

MinimumAchievement0%

MaximumAchievement
200%

The exceptionally low level of achievement for EBIT and Free Cash Flow is explained by the significant impact of COVID-19 on Airbus
Commercial performance, partly mitigated by the A400M positive achievements. Given its prominent size, Airbus Commercial
counter performance could not be compensated by the strong achievements of Airbus Helicopters and Airbus Defence & Space.
Normalisations were made to exclude exceptional events such as currency exchange differences or restructuring.
Finally, R&S annual target has been overachieved by more than 200% in the exceptional COVID-19 circumstances. The initial objective
was to decrease the FR1 from 6.18 (1) to 5.25. At the end of 2020, FR1 has been measured at 3.81.
For 2021 R&S component, in addition to the FR1 value driver used in 2020, the Board of Directors decided to select a climate value
driver in line with its significant impact in the materiality assessment of the Company’s approach to R&S (see: Chapter 6 – Non
financial information and other corporate activities – Materiality matrix and paragraph b- Health and Safety in Chapter 6 – 6.1.3:
Builds its business on the foundation of safety & quality). In order to support the Company’s target of reducing CO2 emissions by
40% by 2030, the Board of Directors decided to translate this ambition into a concrete objective and include the CO2 reduction
target in the collective variable remuneration of the CEO and all executives. The objective proposed for 2021 is a reduction of 3%
versus our actual 2020 CO2 emissions of our industrial sites and operations. The reference used for 2020 takes into account theeffect of the COVID-19 crisis on the production rates while keeping our 2030 target in mind.
It was therefore decided that for 2021 the R&S component would be composed as follows: FR1 for 50% and CO2 avoidance for 50%.

(1) The 6.18 figure corresponds to the 2019 FR1 figure of 5.58, but includes apprentices and temporary employees together with the Airbus’ active workforce.

Airbus SE / Report of the Board of Directors 202027

4. Corporate Governance /4.4 Remuneration Report

Performance Achievement – Individual Component
The Individual Component in 2020 results from an achievement level of 150% out of 200%, assessed by the RNGC and approvedby the Board of Directors on the basis of the CEO’s performance and behaviour, mostly with respect to the way the Company
reacted to the COVID-19 pandemic, and remained focused on its strategic agenda.
The Company works with TCOs to measure its performance. They have been adapted to focus on the critical objectives that had
to be achieved in order to successfully navigate the COVID-19 environment. The TCOs mirror the Company’s business focus andits core pillars of safety, quality, integrity, and compliance whilst protecting the core business by securing deliveries.
The main factors determining the achievement level, included, but not limited to:

Outcomes–– Health and Safety–– Protection of people in the early stages of the crisis. Redefining the basic processes and standards at Airbus, in particularin the production environment.
–– Contribution to broader society in different forms including sourcing and carrying millions of masks with Airbus flight test aircraft,designing and manufacturing ventilators and visors.
–– Defining and implementing more sustainable ways of working under stricter and evolving sanitary conditions.
–– Operational–– Securing the supply chain and initiation of monitoring system and support for suppliers at risk.
–– Stabilisation of end-to-end planning and achievement of nominal flow on Single Aisle FAL under the hampering circumstances
created by the pandemic-related restrictions and contingencies.
–– 566 commercial aircraft deliveries to 87 customers in 2020, in line with the production adaptation plan set out in April 2020
in response to the pandemic while managing the backlog orders in a volatile market.
–– Delivery of 300 rotorcraft by Airbus Helicopters worldwide, resulting in a stable 48% share of the civil and parapublic market.
–– Successful certifications: joint EASA and FAA Type Certification received for the A330-800 and the five-bladed H145, EASAType Certification received for the multi-role twin engine H160, marking a new chapter for the programme.
–– Launch of the demonstrator phase for the FCAS through the award by the Governments of France and Germany of the initialframework contract (Phase 1A) to Airbus Defence & Space and Dassault Aviation, together with their partners MTU AeroEngines, Safran, MBDA and Thales.
–– Successful completion of the IOC of the European Space Agency’s Solar Orbiter spacecraft.
–– Rapid and efficient rollout of GSuite in the crisis as well as implementation of information management and security adaption
measures required to allow safe remote working and ensure business continuity.
–– Progress on security matters including a reorganisation of the function now reporting directly to the CEO, the reshapingof the governance towards a Company-wide risk-based approach.
–– Commercial–– Commercial Aircraft backlog management and commercial renegotiations to support customers and regain some visibility
for the internal and external industrial system.
–– Securing a total of 383 new commercial aircraft orders (net: 268 orders), demonstrating continued customer endorsements
across all market segments.
–– 289 gross orders (net: 268 orders) logged by Airbus Helicopters in a challenging market heavily impacted by the pandemic.
–– Signing by Airbus Defence & Space of a: (i) contract to deliver 38 new Eurofighter aircraft to the German Air Force; and (ii) major
contract for the development, supply and integration of 115 Eurofighter ESCAN Radars for the German and Spanish Eurofighter
fleet.
–– Balance Sheet–– Early business adaptation and robust and efficient cash containment measures introduced at the start of the pandemic.
–– Early securing of additional credit lines, to gain access to liquidity in view of the unknown impacts of the pandemic.
–– Airbus’ resilience in the most challenging crisis to hit the aerospace industry demonstrated by the 2020 financials: FY revenues€ 49.9 billion; FY EBIT Adjusted € 1.7 billion; FCF before M&A and customer financing FY € -6.9 billion (Q4 € 4.9 billion);
Net cash position at € 4.3 billion.
–– Innovation–– Development of an innovative e-delivery solution to overcome international travel restrictions, allowing customers to receive theiraircraft while minimising the need for their teams to travel. Such solution represented more than 25% of the 2020 deliveries.
–– First free flight of the Airbus Helicopters’ VSR700 Unmanned Aerial System (UAS) prototype successfully performed.
–– Strong progress of the Airbus de-carbonisation agenda and collaboration with state agencies for broader industry alignment
on future R&T priorities.
–– Revelation by Airbus of the three concepts for the world’s first zero-emission commercial aircraft to enter into service by 2035.

Behaviour–– Ethics & Compliance, Sustainability, Stakeholder Relations–– Successful management of the COVID-19 crisis by the whole management team recomposed in 2019, under the leadershipof the CEO.
–– As highlighted by the Board evaluation, strengthened and increased communication between the management team andthe Board of Directors, co-ordinated by the Chairman and CEO who developed an efficient and trustful relationship.
–– Continuous transparent information sharing to the Board of Directors, Executives and more generally all employees about
the Company’s situation (including financial and operation status as well as the Health & Safety status of the workforce), thatproved to be of real support in terms of giving direction and meaning to ensure continuous engagement in an unprecedented crisis.

28

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Report–– Setting the tone at the top by promoting a strengthened approach to Ethics, Compliance and Sustainability throughout
the Company:——making Responsibility & Sustainability central to the Company’s Priorities, including making sustainability part of the collective
component of the Executives’ variable remuneration and formally adding such focus and responsibility into the remit of
the former Ethics & Compliance Committee;——despite the tremendous business, financial and organisational challenges faced, the Ethics & Compliance programme andAirbus’s corporate culture proved resilient during the COVID-19 crisis. In addition, significant progress was made on the designof the export control programme and for the anti-bribery and corruption aspects focus was made on further maturity,
digitalisation, and integration of compliance measures into existing Company;——development of a new I&D strategy tied to the Company’s objectives.
–– Refocusing of the Airbus Foundation to respond to the COVID-19 pandemic by prioritising the support for humanitarian actionsof its NGO partners, transporting medical supplies in addition to organising aid transports and providing satellite imagery
following devastating floods and hurricanes around the world.

d) Long-Term Incentive Plan
2020 Grant
Under the Company’s Remuneration Policy, the CEO is eligible to receive a Performance Units and Performance Shares award
under the Company’s LTIP. The value of the Performance Unit and Share award is capped at 100% of the Base Salary at the dateof grant. During 2020, the CEO was granted an aggregate of 19,840 of Performance Units and Performance Shares. The LTIP
awards during 2020, in line with the Remuneration Policy (4.4.2 B item b)), represent one third of the CEO’s target Total Direct
Compensation. The table below gives an overview of the Performance Units and Performance Shares granted to the CEO in 2020
pursuant to the LTIP:
UNIT PLAN: NUMBER OF PERFORMANCE UNITS
Granted in 2020

Vesting dates

9,920

Vesting schedule is made up of two tranches over two years:(i) 50% expected in May 2024(ii) 50% expected in May 2025

Granted in 2020

Vesting dates

9,920

Vesting schedule is made up of one tranche:(i) 100% expected in May 2024

Guillaume Faury

SHARE PLAN: NUMBER OF PERFORMANCE SHARES

Guillaume Faury

The grants in 2020 were performed in compliance with the performance measures (average EPS (75%) and cumulative FCF (25%))
described in paragraph 4.4.2 B item e).

Vesting Values in 2020
In 2020, the CEO received both cash payments and vested shares in connection with the vesting of 2015 and 2016 LTIP awards:–– Cash: the total cash payment to the CEO amounted to € 287,186 in 2020.
–– Shares:–– in connection with the 2015 LTIP award, the CEO had elected that 25% of his grant should be deferred into shares.
Therefore, the CEO received 1,998 vested shares on the second vesting date for LTIP 2015 (2 June 2020);–– in connection with the 2016 LTIP award, the CEO had elected that 25% of his grant should be deferred into shares.
Therefore, the CEO received 4,272 vested shares on 7 May 2020.

Airbus SE / Report of the Board of Directors 202029

4. Corporate Governance /4.4 Remuneration Report

LTIP OVERVIEW: GRANTING AND VESTING

Date ofgrants

Grant
Type Number

Shareprice at
grant
date

Value at(Un)
grant date conditional

Performanceachievement

Units withperformanceachievement

Dates ofvesting

Share value atvesting dates*

2015

Units

10,656€ 56.31€ 600,039

Conditional

75%

7,992

2 vestings in
2019-2020

1st vesting –31 May 2019:€ 112.62
2nd vesting –2 June 2020:€ 55.72

2016

Units

5,696

€ 52.67€ 300,008

Conditional

75%

4,272

2 vestings in
2020-2021

1st vesting –7 May 2020:€ 56.272016

Shares5,696€ 52.67€ 300,008

Conditional

75%

4,272

1 vesting in
2020

7 May 2020:€ 53.80

2017

Units

4,404

€ 73.81€ 325,059

Conditional

50%

2,202

2 vestings in
2021-2022

Not yet known2017

Shares4,404€ 73.81€ 325,059

Conditional

50%

2,202

1 vesting in
2021

Not yet known

2018

Units

4,208 € 106.94€ 450,004

Conditional

Not yet known

Not yet known

2 vestings in
2022-2023

Not yet known2018

Shares4,208 € 106.94€ 450,004

Conditional

Not yet known

Not yet known

1 vesting in
2022

Not yet known

2019

Units

5,530

€ 122.06€ 674,992

Conditional

Not yet known

Not yet known

2 vestings in
2023-2024

Not yet known

2019

Shares5,530€ 122.06€ 674,992

Conditional

Not yet known

Not yet known

1 vesting in
2023

Not yet known

2020

Units

9,920

€ 68.04€ 674,957

Conditional

Not yet known

Not yet known

2 vestings in
2024-2025

Not yet known

2020

Shares

9,920€ 68.04€ 674,957

Conditional

Not yet known

Not yet known

1 vesting in
2024

Not yet known

Calculations may involve rounding to the nearest unit.
* Vesting will occur according to the respective rules and regulations of each plan.
NOTE: 2015 to 2018 awards were granted to Mr Faury before his appointment as CEO and should vest during his mandate.

Performance Conditions of LTIP 2017–– The performance conditions for LTIP 2017 were determined as follows: if the Company reports a positive cumulative EBIT,a minimum portion of 50% of the Performance Units / Shares vest. If the Company reports a negative cumulative EBIT resulting
from exceptional circumstances, the Board of Directors can decide at its sole discretion to vest a maximum portion of 50%of the Performance Units / Shares.
–– 50% to 150% of the allocation would be granted depending on the compounded achievement of the two following performance
criteria:–– 75% of average EPS (“Ave EPS”): determined on a linear basis depending on three-year Ave EPS for the 2017, 2018 and 2019fiscal years, with the three-year Ave EPS target for an allocation of 100% equal to € 4.40; and–– 25% of cumulative FCF (“Cum FCF”): determined on a linear basis depending on three-year Cum FCF for the 2017, 2018and 2019 fiscal years, with the three-year Cum FCF target for an allocation of 100% equal to € 5,774 million.

Review of Achievement of Performance Conditions
On 17 February 2021, the Board of Directors noted the achievement of the performance conditions of the 2017 plan, i.e. for the 2018,2019 and 2020 fiscal years. The three-year Ave EPS was € 1.83 and the three-year Cum FCF was € 4,311 million, after normalisation
to align them with policies in force when setting the target (notably IFRS 15 and A220 impacts).
The cumulative EBIT for the 3-year period is positive, leading, according to the policy, to the vesting of 50% of Performance Shares
and Units. The COVID-19 crisis leads to low performance for both average EPS and Cum FCF. The positive performances of 2018and 2019 exercices did not mitigate the 2020 exercice strongly impacted by the sanitary crisis leading to no vesting above 50%.
For reasons of confidentiality, the precise targets set for the average EPS and cumulative Free Cash Flow, even though they havebeen properly established and validated in a suitable manner, cannot be publicly disclosed as these objectives are considered
as competitive sensible information. Nonetheless, in the spirit of providing the highest level of transparency to our shareholders
and to adhere to best practices, retrospective information demonstrating the stringency of the targets set by the Board of Directors
is provide for the previous LTIP, as follows:30

Airbus SE / Report of the Board of Directors 2020

4. Corporate Governance /4.4 Remuneration Report

Date ofgrants
2015
2016
2017

KPI
Ave EPS
Cum FCFAve EPS
Cum FCFAve EPS
Cum FCF

Numberof units
10,656
11,3928,808

Target for
a 100%
allocation

Achieved

Performanceachievementin percentage€ 4.02€ 2.9550%€ 8,281m€ 10,469m

150%€ 4.40€ 3.3550%€ 5,774m€ 11,218m

150%€ 6.00€ 9,339m€ 1.83€ 4,331m

50%
50%

Compounded
For comparison,
performance Resulting average EPS for the lastachievement investing
three reported years
percentage in number
at the date of grant
75%

7,992

75%

8,544

50%

4,404

€ 2.10 (1)€ 2.76 (2)€ 2.28 (3)(1) Average EPS of 2014, 2013 and 2012.
(2) Average EPS of 2015, 2014 and 2013.
(3) Average EPS of 2016, 2015 and 2014.
Based on the above, the ratio between the fixed part of the remuneration of the CEO in 2020 (Base Salary, annual contribution to the Company’s defined contribution pension planand benefits) and the variable part of the remuneration (Variable Remuneration related to 2020 paid-out in 2021 and LTIP vesting in 2020) is 49%/51%.

e) Share Ownership
The CEO owned 21,131 Airbus SE shares on 31 December 2020.
The CEO has engaged a personal investment plan in Airbus SE
shares to reach the target of 200% of the Base Salary by 2021.
Please refer to the AFM website www.afm.nl for any further
information related to the transactions of the CEO.

f) Employee Share Ownership Plan (ESOP)In March 2020, the Company offered all eligible employees theopportunity to subscribe to a share matching plan, throughwhich the Company matches a certain number of directly
acquired shares with a grant of matching shares. This ratio varies
depending on the number of shares acquired at fair market value
by the employees, with a maximum discount of 44%. The totaloffering was up to 2.2 million shares of Airbus SE, open to all
qualifying employees. Information about the plan can be foundon the Company’s website.
Under the umbrella of the ESOP 2020, a dedicated UK tax
advantageous Share Incentive Plan (“SIP”) was also deployedin March 2020.

The pension rights arising from the Company’s defined
contribution plan (i.e. contribution of 20% of the pensionable
remuneration, which is the Base Salary and the most recently
paid VR) are deducted from the frozen pension rights describedabove.
The present value of the remaining CEO’s pension obligation
related to the frozen defined benefit commitment is estimatedannually by an independent actuarial firm according to theinternational accounting standard IAS19 as applied by theCompany for post-employment benefits. As of 31 December
2020, the defined benefit obligation amounted to € 9,423,777(€ 9,167,371 in 2019). This obligation has been accrued in the 2020
Consolidated Financial Statements and will be updated annually
up to the retirement date of the CEO considering future changes
on economic assumptions or other factors like salary increase.
For the fiscal year 2020, the cost related to the CEO’s pension
rights accrued under Company’s plans during the year
represented an expense of € 1,179,332 (versus a net profit of€ (2,814,868) in 2019 due to the effect of the freeze of the defined
benefit commitment).

Although the CEO was eligible for the plan, he did not participate in
the ESOP 2020 plan favouring the development of a shareholding
among other employees of the Company.

The annual cost of pension rights accrued under applicablemandatory collective and state pension plans are accounted
for among social charges (please refer to Note 34 to the IFRS
Consolidated Financial Statements for further details).

g) Benefitsi) Clawback

Costs of benefits provided through applicable mandatory
collective and social security plans are accounted for amongsocial charges (please refer to Note 34 to the IFRS Consolidated
Financial Statements for further details). The monetary value ofother benefits provided to the CEO in 2020 amounts to € 33,790.

The Board of Directors did not apply any clawback in 2020.

h) Retirement
Until the end of 2019, the retirement benefit of the CEO accrued
through a defined benefit commitment which consists of granting
a pension at retirement age equal to 50% of the Base Salaryfor five years of service in the Executive Committee, including
mandatory applicable collective and state pension plans. Such apercentage of pension would accrue gradually to 60% of the Base
Salary after ten years of service within the Executive Committee.
Following the Board of Directors decision approved in the AGM
2020, the accrued pension rights under this commitment havebeen frozen based on the seniority of the CEO as Executive
Committee member at the end of 2019. A target replacement
ratio has therefore been set at 52% of his Base Salary (i.e. 26%of the sum of his Base Salary and his target VR) and will nolonger accrue. The pension rights under this commitment remain
unvested until the retirement date of the CEO.

j) Pay Ratio
The Dutch Corporate Governance Code recommends that theCompany provides a ratio comparing the compensation of the
CEO and that of a “representative reference group” determinedby the Company.
The Company’s pay ratio is calculated by comparing the cash
compensation of the CEO with the average compensation of fulltime equivalent permanent employees from France, Germany,
the UK and Spain for the Company, excluding subsidiaries(encompassing around 94,000 employees).
The aggregate cash compensation over the 2020 fiscal year
was used as a reference amount (i.e., excluding the value ofequity incentive awards and other non-cash compensation
components). To calculate the ratio, the gross sum of the Base
Salary, annual bonus, profit and success sharing, overtime,
premium for work conditions and other premiums was taken
into account.

Airbus SE / Report of the Board of Directors 202031

4. Corporate Governance /4.4 Remuneration Report

Based on this methodology, the ratio between the cash
compensation of the CEO (i.e. the Base Salary for the CEO andthe aggregated VR related to 2019 for the former and currentCEO) and the average compensation of full-time equivalentpermanent employees for the fiscal year to which this report
relates is 38 (for 2019: 49 based on exact figures) (rounded to
the nearest integer).
Note for Information on the CEO Base Salary Contemplated
for 2021: The evolution of the pay-ratio between 2019 and2020 is impacted by the change of CEO and the first impactsof the COVID-19 crisis leading to a decrease in remuneration.
However, in the current context the RNGC does notcontemplate any change in the CEO Base Salary for 2021
compared to 2020.

k) Severance
No payment has been made to the CEO in 2020 related toseverance or other termination indemnity.
Under the current CEO’s appointment terms and conditions,the payment of an indemnity in case of termination would be
subject to performance conditions. These conditions would
be fulfilled if the collective and individual components of the
VR for the last two financial years preceding the financial year
during which the termination occurs have been assessed by
the Board of Directors at 100% or more.

l) Development of the Compensation
The table below provides an overview of the development of thedirect cash compensation paid to the CEO during a financial
year composed by the Base Salary plus the VR (as defined
below) and of the Employee Compensation (as defined below).

2020

2019

2018

2017

2016

Annual Base Salary (in € thousand)

1,350

1,392 (1)

1,500

1,500

1,500

VR (in € thousand)

1,553

2,318

2,168

1,913

1,932

Total

2,903

3,710

3,668

3,413

3,432

Annual Variation-21.8%

+1.1%

+7.5%

-0.6%

+2.8%

II. Long Term Incentive Plan (in € thousand) (3)

1,350

1,350

-

1,500

1,500

EBIT Adjusted (in € million)

1,706

6,946

5,834

4,253

3,955

Annual Variation

-75%

+19%

+37%

+8%

-4%

FCF before M&A and customer financing (in € million)(6,935)

3,509

2,912

2,949

1,408

Annual variation

-298%

+21%

-1%

+109%

+20%

75.9

75.1

73.6

71.0

71.1

+1.0%

+2.0%

+3.6%

0.0%

Financial year
I. CEO’s direct cash compensation(2)

III. Company Performance

IV. Employee Compensation (in € thousand) (4)Annual Variation(1) Base salary 2019 relates to the former CEO up to 10 April 2019 and to the current CEO from 10 April 2019.
(2) VR paid during the financial year at stake in relation to the previous financial year. In 2020, the VR paid is related to the former CEO from 1 January 2019 up to 10 April 2019(based on target) and to the current CEO from 10 April 2019 up to the end of the year 2019.
(3) Face value of LTIP granted in the financial year. No LTIP were granted in 2018 to the former CEO due to his future departure.
(4) Average compensation of full-time equivalent permanent employees from France, Germany, the UK and Spain for the Company, excluding subsidiaries, composed by gross sumof the Base Salary, annual bonus, profit and success sharing, overtime, premium for work conditions and other premiums. For the 2020 financial year, the amount presented isstill an estimate and will be adjusted next year.

4.4.4 Implementation of the Remuneration Policy in 2020:
Non‑Executive Directors
This section describes how the Remuneration Policy was
implemented in 2020 in respect of the Non-Executive Directors.
In line with the Remuneration Policy, the implementation thereofwith regard to the Non-Executive Directors aims at ensuring faircompensation and protecting the independence of the Board’s
Members. Their remuneration should be commensurate to thetime spent and the responsibilities of their role on the Board of
Directors.
The last review of the Board remuneration was undertaken in2018 with the support of an independent consultant. The Board
remuneration is in line with market practice, incentivises
attendance and recognises the strategic role played by the Boardof Directors in the Company’s developments. The CEO is the
only Member of the Board of Directors who is not entitled to any
Board Membership fee.

32

Airbus SE / Report of the Board of Directors 2020

In 2020, Non-Executive Members of the Board of Directors wereentitled to the following fees:a) Board Fees–– Fixed fee for membership of the Board of Directors (EUR/year):–– Chairman of the Board: 210,000;–– Member of the Board: 80,000.
–– Attendance fees (EUR/Board meeting):–– Chairman: 15,000;–– Member: 10,000.
Attendance fees shall decrease by 50% in case of an attendanceby phone or a Board meeting held by phone.

4. Corporate Governance /4.4 Remuneration Reportb) Committee Fees–– Fixed fee for membership of a Committee (EUR/year):–– Chairman: 30,000;–– Member of a Committee: 20,000.
–– Attendance fee for membership of a Committee applicable
to chair and members (EUR/additional meeting above four
meetings per Committee per year, whether these meetings
were held physically or by phone):–– Physical participation: 3,000 if the chair or member is basedin Europe and double attendance fee amount, i.e. 6,000 if
the chair or member is based outside Europe;–– Participation by phone (whether the meeting is held physicallyor by phone): 1,500.
For personal reasons, and with regards to the implementationof the Remuneration Policy approved at the AGM in 2016, Denis
Ranque decided in 2016 and onwards to waive a portion of

his remuneration as Chairman of the Board of Directors (Board
chairmanship fixum and attendance fees). For 2020, considering
the COVID-19 crisis context, Denis Ranque decided that such a
waiver will correspond to half of his 2020 remuneration (including
fixum and attendance fees) as Chairman of the Board of theCompany, equivalent to an amount of € 43,956 (based on thenumber of Board meetings held from 1 January 2020 until theend of his mandate on 16 April 2020).
Considering the COVID-19 crisis context, René Obermann
decided to waive half of his 2020 remuneration (including fixum
and attendance fees) as Chairman of the Board of the Company,
equivalent to an amount of € 115,673.
These waived amounts are contributed to several non-profit
foundations, including the Airbus Foundation.

The remuneration of the Non-Executive Members of the Board of Directors was as follows:
2020
Fixum (1)(In €)

2019

AttendanceFees (2)

Total

Fixum (1)AttendanceFees (2)Total

Non-Executive Board Members
René Obermann (3)117,738

76,250193,988

100,000

102,000

202,000

Victor Chu

100,000

78,000178,000

100,000

107,000

207,000

127,087

90,000217,087

114,176

105,000

219,176

Ralph D. Crosby Jr.

100,000

83,000183,000

100,000

108,500

208,500

Lord Drayson

120,000

80,000200,000

120,000

105,000

225,000

Mark Dunkerley (5)70,87948,000118,87900070,87958,000128,87900

0

130,000

93,000223,000

127,265

95,500222,765

Jean-Pierre Clamadieu

Stephan Gemkow

(4)

(5)

Catherine Guillouard (6)María Amparo Moraleda Martínez

130,000

85,000215,000

130,000

105,000

235,000

Claudia Nemat

100,000

80,000180,000

100,000

74,500174,500

Carlos Tavares

80,00070,000150,000

80,00065,000145,000

Denis Ranque (7)61,73135,00096,731

210,000

101,000

311,000

Hermann-Josef Lamberti (8)35,27435,00070,274

122,735

77,500200,235

1,243,588

911,250

2,154,838

1,304,176

1,046,000

2,350,176

Former Non-Executive Board Members

Total(1) Fixum includes a base fee for Board membership and Committee membership within the Audit Committee, the Remuneration, Nomination and Governance Committee (“RNGC”)
and/or the Ethics, Compliance and Sustainability Committee (“ECSC”) as the case may be. The fixum for the year 2020 was paid 50% in January 2020 and 50% in July 2020.
The fixum for the year 2019 was paid 50% in January 2019 and 50% in July 2019.
(2) 2020 attendance fees include the Board attendance fees and the fees in relation to Audit Committee, RNGC and ECSC meetings. The Board attendance fees related to the firstsemester 2020 were paid in July 2020, those related to the second semester 2020 were paid in January 2021. The Committees attendance fees related to full year 2020 were
paid in January 2021.
(3) Chairman of the Board of Directors since 16 April 2020. Member of the Audit Committee until 16 April 2020. Member of the former Ethics & Compliance Committee between
30 July 2019 and 16 April 2020.
(4) Member of the former Ethics & Compliance Committee between 10 April 2019 and 16 April 2020. Chair of the ECSC since 16 April 2020.
(5) Member of the Board of Directors and of the Audit Committee since 16 April 2020.
(6) Chair of the Audit Committee since 10 April 2019.
(7) Chairman of the Board of Directors and of the former Ethics & Compliance Committee until 16 April 2020.
(8) Member of the Board of Directors and of the Audit Committee until 16 April 2020.

The total aggregated remuneration (i.e. fixum and attendancefee) of the Non-Executive Members of the Board of Directors
were respectively € 2,010,910 in 2018, € 2,080,403 in 2017 and€ 1,750,768 in 2016.

attendance and recognise the strategic role played by the Boardof Directors in the Company developments. The applicable fixumfor Board membership as well as Committee membership andchairmanship remain unchanged since 2007.

The applicable fixum for Board chairmanship as well as
the applicable attendance fees for Board membership andchairmanship remain unchanged since 1 January 2016 (firstcomprehensive revision since 2007) following the decision madeat the 2016 AGM to increase the remuneration of the Chairman(fixum by € 30,000 and attendance fees by € 5,000) and double(to € 10,000) the attendance fees of the Non-Executive Board
Members in order to be in line with market practice, incentivise

The applicable attendance fees for Committee membership
remain unchanged since 1 January 2019 following the decision
made at the 2019 AGM to allocate an attendance fee above four
meetings per Committee per year in order to take into accountDirectors’ attendance at a greater number of Committee meetings
when the workload substantially intensifies due to exceptional
circumstances.

Airbus SE / Report of the Board of Directors 202033

4. Corporate Governance /4.5 Enterprise Risk Management System

4.4.5 Miscellaneous
Policy for Loans and Guarantees Granted
The Company’s general policy is not to grant any loan to theMembers of the Board of Directors. Unless the law provides
otherwise, the Members of the Board of Directors shall bereimbursed by the Company for various costs and expenses,
like reasonable costs of defending claims. Under certain

circumstances, such as an act or failure to act by a Member ofthe Board of Directors that can be characterised as intentional,
intentionally reckless, or seriously culpable, there will be noentitlement to this reimbursement. The Company has also
taken out liability insurance (“D&O” – Directors & Officers) forthe persons concerned.

4.5 Enterprise Risk Management System
The Company’s long-term development and production lifecycle
make ERM a crucial mechanism for both mitigating the risks
faced by the Company and identifying future opportunities.
Applied across the Company and its main subsidiaries, ERM is apermanent top-down and bottom-up process, which is executed
across Divisions at each level of the organisation. It is designed
to identify and manage risks and opportunities. A strong focus
is put on the operational dimension due to the importance ofProgrammes and Operations for the Company.
ERM is an operational process embedded into the day-today management activities of Programmes, Operations andFunctions. The top risks and their mitigations are reported to theBoard of Directors through a reporting synthesis, consolidated
on a quarterly basis.
The ERM system is articulated along five axes:–– Anticipation: early risk reduction and attention to emerging risks;–– Speak-up & early warnings;–– Robust risk mitigations;–– Opportunities; and–– Strong Governance.

ERM Process
The objectives and principles for the ERM system, as endorsed by
the Board of Directors, are set forth in the Company’s ERM Policy
and communicated throughout the Company. The Company’s
ERM Policy is supplemented by directives, manuals, guidelines,
handbooks, etc. External standards which contribute to theCompany’s ERM system include the standards as defined by
the International Organisation for Standardisation (“ISO”).
The ERM process consists of three elements:–– a strong operational dimension – derived from ISO 31000 –to enhance operational risk and opportunity management,
looking in particular at identifying and mitigating Single Pointsof Failure (SPOF);–– a reporting dimension (bottom up and top down), whichcontains procedures for the status reporting of the ERM systemand the risk/opportunity situation; and–– an ERM confirmation dimension, which comprises proceduresto assess the effectiveness of the ERM system.
The ERM process applies to all relevant sources of risks andopportunities that potentially affect the Company’s activities,
its businesses and its organisation in the short-, mid- and longterm. The ERM process is part of the management process andinter-related with the other processes.

34

Airbus SE / Report of the Board of Directors 2020

All Airbus organisations, including Divisions, subsidiaries
and controlled participations, commit to and confirm theeffective implementation of the ERM system. The annual ERM
Confirmation Letter issued by each organisation is the formal
acknowledgement about the effectiveness of the ERM system.
For the main risks to which Airbus is exposed, see Chapter 4.6“Risk Factors” of this document.

ERM Governanceand Responsibility
The governance structure and related responsibilities for the
ERM system are as follows:–– the Board of Directors with support of the Audit Committee
supervises the strategy and business risks and opportunities,
as well as design and effectiveness of the ERM system;–– the CEO, with the top management, is responsible for
an effective ERM system. He is supported by the CFO,
who supervises the Head of ERM, and the ERM system design
and process implementation;–– the Head of ERM has primary responsibility for the ERM
strategy, priorities, system design, culture development andreporting tool. He supervises the operation of the ERM system
and is backed by a dedicated risk management organisationin the Company focusing on the operational dimension, early
warning and anticipation culture development while actively
seeking to reduce overall risk criticality by challenging thebusiness. The risk management organisation is structured asa cross-divisional Centre of Competence (“CoC”) and pushes
for a proactive risk management; and–– the management at executive levels has responsibility
for the operation and monitoring of the ERM system in its
respective areas of responsibility and for the implementationof appropriate response activities to reduce risks and seize
opportunities, considering the recommendations of the internaland external auditors.

ERM Effectiveness
The ERM effectiveness is analysed by:–– ERM CoC, based on ERM reports, confirmation letters, insitu sessions (e.g. risk reviews), participation to key controls(e.g. major Programme Maturity Gate Reviews);–– Risk & Opportunity Deep Dives proposed by the ERM CoC andperformed by the functions with the involvement and supportof the ERM CoC; and–– Corporate Audit, based on internal corporate audit reports.

4. Corporate Governance /4.6 Risk Factors

The combination of the following controls is designed to achieve reasonable assurance about ERM effectiveness:
Organisation

Explanations

Board of Directors /Audit Committee

Regular monitoring
The Board of Directors and the Audit Committee review, monitor and supervise the ERM system. Any material
failings in, material changes to, and/or material improvements of the ERM system which are observed, made and/or planned are discussed with the Board of Directors and the Audit Committee.

Top Management

ERM as part of the regular divisional business reviews
Results of the operational risk and opportunity management process, self-assessments and confirmation
procedures are presented by the Divisions or other Airbus’ organisations to top management.

Management

ERM confirmation letter procedure
Entities and department heads that participate in the annual ERM compliance procedures must sign ERM
Confirmation Letters.

ERM CoC

ERM effectiveness measurement
Assess ERM effectiveness by consideration of ERM reports, ERM confirmations, in situ sessions (risk reviews etc.),
participation to key controls (e.g. major Programme Maturity Gate Reviews).

Corporate Audit

Audits on ERM
Provide independent assurance to the Audit Committee on the effectiveness of the ERM system.

E&C

Alert System
Detect deficiencies regarding conformity to applicable laws and regulations as well as to ethical business principles.

Board Declaration
Based on the Company’s current state of affairs, the reports
made directly available to the Board of Directors, coming fromdifferent processes, audits and controls and the information it
received from management, the Board of Directors believes tothe best of its knowledge that:–– the internal risk management and control systems provide
reasonable assurance that the financial reporting does notcontain any material inaccuracies;–– this report provides sufficient insight into any material failings in
the effectiveness of the internal risk management and control
systems;–– it is justified that the Financial Statements have been preparedon a going concern basis; and–– this report states the material risks and uncertainties that are
relevant to the expectation of the Company’s continuity forthe period of 12 months after the preparation of the report.
It should be noted that no matter how well designed, the internalrisk management and control system has inherent limitations,such as vulnerability to circumvention or overrides of thecontrols in place. Consequently, no assurance can be giventhat the Company’s internal risk management and system andprocedures are or will be, despite all care and effort, entirely
effective.

4.6 Risk Factors
The Company is subject to the risks and uncertainties described
below that may materially affect its business, results of operations
and financial condition. These are not the only risks the Company
faces. Additional risks and uncertainties not presently known to
the Company, or that it currently considers immaterial may also
impair its business and operations.
Although a certain degree of risk is inherent in the Company’sbusiness (as described in the risk factors mentioned in thissection), the Company endeavours to minimise risk to the extent
reasonably possible. To achieve its strategy, the Company isprepared to take modest or low event risks to provide sufficient
predictability on profitability and cash flow given the necessity
to stay competitive, invest in R&D and manage the diversified
business portfolio in a world of uncertain market and economic
conditions. Due to the importance of programmes and operations
for the Company, a particular focus is put on the operational
dimension of risk identification and management. Within the areaof legal and compliance risks, the Company seeks to ensure thatits business practices conform to applicable laws, regulations andethical business principles, while developing a culture of integrity.
Regarding financial risks, our risk approach can be qualified as
prudent and the Company aims to minimise the downside risk
through an appropriate liquidity buffer, moderate financial leverageand the use of hedging derivatives and other insurance products.

4.6.1 Financial Market Risks
Global Economic Conditions
The Company’s business, results of operations and financial
condition are materially affected by global economic
conditions.
Market disruptions and significant economic downturns may
develop quickly due to, among other things, crises affecting
credit or liquidity markets, regional or global recessions, sharp
fluctuations in commodity prices (including oil), currency
exchange rates or interest rates, inflation or deflation, sovereign
debt and bank debt rating downgrades, restructurings ordefaults, or adverse geopolitical events (including the impactof Brexit, discussed below and global policy including in the
US, European Union and China) or global pandemic diseases
such as COVID-19. The previous US administration introduced
greater uncertainty with respect to US tax and trade policies,
tariffs and government regulations affecting trade between
the US and other countries. Such measures affected andmay continue to affect countries where our customers andsuppliers are located or where the Company has an operationalpresence or to which its financing activities are linked.

Airbus SE / Report of the Board of Directors 202035

4. Corporate Governance /4.6 Risk Factors

See – “The Company’s business, results of operations andfinancial condition could be materially affected by Brexit”,“– Business-Related Risks – COVID-19 Risks” and “– BusinessRelated Risks – Availability of Government and other Sourcesof Financing”.
The Company’s global presence includes France, Germany,
Spain and the UK, fully-owned subsidiaries in the United States(“US”), China, Japan, India and in the Middle East, and spareparts centres in Hamburg, Frankfurt, Washington, Beijing,
Dubai and Singapore. The Company also has engineering andtraining centres in Toulouse, Miami, Mexico, Wichita, Hamburg,
Bangalore, Beijing and Singapore, as well as an engineering
centre in Russia. There are also hubs and field service stations
around the world. The Company also relies on industrial cooperation and partnerships with major companies and a wide
network of suppliers. This global presence entails the risk of being
affected by weak market and economic conditions in particularin Europe, the US and Asia where it manufactures and to which
it sells the majority of its products.

Demand for military and parapublic products may be further
affected by governmental budget constraints caused byeconomic pressure and COVID-19 measures.

As of 31 December 2020, the Company’s workforce amounted to131,349 employees of which over 15,000 employed outside ourcore countries. In terms of nationalities, 35.7% of the Company’s
employees are from France, 32.3% from Germany, 7.7% fromthe UK and 9.8% from Spain. US nationals account for 2.1% of
employees. The remaining 12.4% are employees coming froma total of 134 other countries. In total, 89.9% of the Company’s
active workforce is located in Europe on more than 100 sites.

Therefore protracted weak global economic conditions could
directly result in:–– financial distress of airlines and lessors, and potential
bankruptcies around the world;–– requests by customers to postpone or cancel existing orders
for aircraft (including helicopters) or decisions by customers toreview their order intake strategy due to, among other things,
lack of adequate credit supply from the market to financeaircraft purchases or increases in operating costs or weaklevels of passenger demand for air travel and cargo activity
more generally, which could negatively impact the Company’s
results of operations;–– variations in public spending for defence, homeland security
and space activities, which may lead to termination or reductionof future funding or cancellations or delays impacting existing
contracts which could negatively impact the Company’s resultsof operations; and–– an increase in the amount of sales financing that the Company
is requested to provide to its customers to support aircraft
deliveries typically secured over the underlying aircraft andbearing exposure to the customer credit risk. See “– Risk Factors– Financial Market Risks – Sales Financing Arrangements”.

It is a priority to ensure that the Company can attract, develop andretain a world-class competent, motivated and flexible workforce,
which fits current and future business requirements in each of thecountries in which we have a presence. A change in economic
conditions in any of the geographies in which we have significant
numbers of employees or key employees may therefore impact
our ability to compete effectively for employees in such countries.

In addition, in the Commercial Aircraft industry it is the industry
standard to include revision clauses in sales and suppliercontracts due to the long terms of such contracts. Such revision
clauses can be based on one or multiple indices and therefore,
can evolve due to changes in economic measures on which such
indices are based, thereby potentially negatively impacting theCompany’s results.

At the end of 2020, approximately 23,000 suppliers from morethan 100 countries supply parts, components, systems andservices to the Company. In 2019, the overall external sourcing
volume of the Company was valued at around € 53 billion.
The Company requires its suppliers’ and subcontractors’
services in order to deliver our products and generate revenue
and profit. Therefore financial instability in any part of the worldthat would affect our suppliers or subcontractors, including
financial conditions resulting in their inability to obtain credit
or even in their insolvency, could impact the Company’s ability
to meet its customer obligations in a satisfactory and timely
manner. In addition, financial instability affecting suppliers or
subcontractors could impact such parties’ ability to meet their
obligations under risk sharing partnership agreements enteredinto with the Company. The COVID-19 pandemic and the resulting
health and economic crisis has increased the Company’s
exposure to supply chain risk.

The Company generally finances its manufacturing activities
and product development programmes, and in particular thedevelopment of new commercial aircraft, through a combination of
cash flows generated by operating activities, customer advances,
European governments’ refundable advances and risk-sharing
partnerships with subcontractors. In addition, the Company’s
military activities benefit from government-financed research anddevelopment contracts. If necessary, the Company may raise
funds in the capital markets. Weak economic circumstancesleading to liquidity constraints or reduced availability of financefor the Company’s customers, suppliers, European and othergovernments, and other risk sharing partners may affect
the Company’s ability to finance its product development
programmes and raise funds in the capital markets.

The behaviour of our customers and by extension, the demandfor, and supply of, the Company’s products and services has been
and may continue to be materially affected by global economic
conditions. Historically, the Company has experienced that orderintake for commercial aircraft has shown cyclical trends, due inpart to changes in passenger demand for air travel and the air
cargo share of freight activity, which are in turn driven by a rangeof economic variables including gross domestic product (“GDP”)
growth and private consumption levels. A further downturn ineconomic factors driven by new variants and successive wavesof the COVID-19 pandemic and the resulting health and economiccrisis and the related drop in air travel in a large part of the world
driving our commercial airline business, could lead to a protracted
weak demand for our commercial aircraft. The significant growthof our commercial aircraft business relative to the Company’s

36

Defence, Space and Government activities has diluted the latter’sability to serve as an effective tool to counter commercial cycles.

Airbus SE / Report of the Board of Directors 2020

The Company’s financial results could also be negatively affected
depending on gains or losses realised on the sale or exchangeof financial instruments; impairment charges resulting fromrevaluations of debt and equity securities and other investments;
interest rates; cash balances; and changes in fair value ofderivative instruments. Increased volatility in the financial markets
and overall economic uncertainty would increase the risk of theactual amounts realised in the future on the Company’s financial
instruments differing significantly from the fair values currently
assigned to them.
Although the potential negative impact of global economic
conditions have been thoroughly assessed, the consequences
thereof could have unforeseen material effects on the Company’sbusiness, results of operations and financial condition, and inparticular if these were to impact the Company’s commercial
aviation activities or otherwise impact its access to financing.

4. Corporate Governance /4.6 Risk Factors

The Company’s business, results of operations and financial
condition could be materially affected by Brexit.
On 29 March 2017, the UK triggered Article 50 of the Lisbon
Treaty, the mechanism to leave the European Union (“Brexit”).
The UK left the EU in an orderly manner on 31 January 2020 under
the terms of the Withdrawal Agreement, opening a transition
period until 31 December 2020.
On 24 December 2020, the EU and UK agreed a deal on their
new long-term relationship – the EU-UK Trade and Cooperation
Agreement (“TCA”) – which has been applied provisionallysince 1 January 2021. The UK Parliament ratified the TCA on
30 December 2020 but it still awaits ratification by the European
Parliament and the Council of the European Union before final
conclusion and entry into force.
On 1 January 2021, the UK left the European Single Market andCustoms Union. The TCA provides for free trade in goods andlimited mutual market access in services, as well as for cooperation
mechanisms in a range of policy areas and UK participation insome EU programmes, supported by a common governance andlevel playing field guarantees. Areas with the most operational
relevance for the Company and which were concerned by Brexit
were: movement of people, goods, airworthiness, transportationand logistics (air and road transport), environment, export control
and data flows and security.
In order to mitigate the risks and anticipate possible consequences
associated with Brexit, the Company launched a major Brexit
planning project in September 2018 involving the following work
streams: People, Certifications, Customs, Procurement & Supply
Chain, Transport & Logistics, Export Control, Environment,
Security, Capital & Financial Services and Legal.
In 2020, the Company continued to work with suppliers andpartners to stockpile parts, prepare its customs and regulatory
systems and mitigate potential impacts where possible. The
Company has been working with suppliers and partners toassess and improve their readiness levels, and encouraging
them to mitigate the potential risks with their own supply chains.
In addition, the Company established a cross-divisional andmulti-functional quick reaction crisis management organisation
to address any unknown events and/or risks which may occur,
including during the months after 1 January 2021.
The TCA is expected to prevent the disruption a no-deal scenario
would have created. Preliminary analysis confirms that although
Brexit will result in a requirement for increased areas of vigilance,
additional administrative work and reduced industrial flexibility,
the continuity of the Company’s business operations and supply
chain in particular are not materially threatened.
The cooperation mechanisms agreed upon enable air connectivity
between the UK and the EU although airlines will have to adapt
to the loss of their existing traffic rights in the other party’s
territory. With regard to airworthiness specifically, the Company
welcomes the provisions of the TCA, including the creation of joint
technical coordination bodies for the effective implementation of
the various annexes of the agreement and awaits the finalisation
and ratification of a Bilateral Aviation Safety Agreement (“BASA”)
between the EU/EASA and the UK/CAA. The Company’s Beluga
operations were unaffected by the end of the transition period
and the first post-transition period set of wings were deliveredfrom Broughton in the UK to Hamburg in Germany on 4 January
2021, as scheduled.
The Company’s industrial footprint makes it operationallydependent on surface transport for the movement of supplies.
In that respect, the TCA provisions allowing for the continuity ofroad transport are welcome, but the combined effect of COVID-19
and new customs administrative processes for exporters andimporters are resulting in additional burdens.

Customs formalities have necessitated changes to
the Company’s IT systems with effect from 1 January 2021.
The increased administrative burden will be mitigated partiallythrough planned improvements in the Company’s digital
infrastructure, which will enter into service throughout 2021.
The implementation of the new customs systems will limit theCompany’s flexibility to implement short-notice changes towing sets before shipping to Final Assembly Lines. A 48-hour
freeze period has been implemented as a preliminary, temporary
measure.
The Company welcomes that the TCA includes provisions for
temporary entry for work purposes with visa-free, short-termbusiness trips and the coordination between the two parties onsocial security, which will support our business operations. While
the fact that a temporary arrangement has been agreed to allow
personal data to be transferred from 1 January 2021, it will be
important that a satisfactory permanent solution is reached as
quickly as possible as these transfers are indispensable to thecontinuity of our operations.
Although the Company notes the absence of defence andsecurity provisions in the TCA, it does not anticipate significant
detrimental consequences from their absence given that mostof the major defence and security programmes are organised
between nations on a multilateral basis. The provisions in the
TCA relating to cooperation on cyber security are also welcome.
The Company has four major engineering and manufacturing
facilities and continues to employ a substantial number of highly
skilled employees in the UK. Given its shared industrial footprint,
the Company must remain vigilant in the medium and long termon the evolution of applicable laws and regulations in the EU andin the UK and the complexities arising thereof in order to avoid
disruptions and greater costs to the Company’s operations. At
this stage the Company expects the agreed level playing field inthat respect to limit the most material adverse effects.

Foreign Currency Exposure
At the end of 2020, more than 75% of the Company’s revenues
are denominated in US dollars, with approximately 60% of suchcurrency exposure “naturally hedged” by US dollar-denominatedcosts. To the extent that the Company does not use financial
instruments to hedge its exposure resulting from this foreign
currency mismatch, its profits will be affected by market changes
in the exchange rate of the US dollar against these currencies.
There are complexities inherent in determining whether andwhen foreign currency exposure of the Company will materialise,in particular given the possibility of unpredictable revenue
variations arising from order cancellations, postponements ordelivery delays. The Company may also have difficulty in fully
implementing its hedging strategy if its hedging counterparties
are unwilling to increase derivatives risk limits with the Company,
and is exposed to the risk of non-performance or default by
these hedging counterparties. The exchange rates at which
the Company is able to hedge its foreign currency exposure
may also deteriorate, as the euro could appreciate against
the US dollar for some time, as has been the case in the past
and as higher capital requirements for banks result in higher
credit charges for uncollateralised derivatives. Accordingly,
the Company’s foreign currency hedging strategy may notprotect it from significant changes in the exchange rate of the
US dollar to the euro and the pound sterling, in particular overthe long term, which could have a negative effect on its financial
condition and results of operations. In addition, the portion of
the Company’s US dollar-denominated revenues that is nothedged in accordance with the Company’s hedging strategy
will be exposed to fluctuations in exchange rates, which may besignificant. As of 31 December 2020, the total hedge portfoliowith maturities up to 2027 amounts to US$ 81.0 billion and covers

Airbus SE / Report of the Board of Directors 202037

4. Corporate Governance /4.6 Risk Factors

a major portion of the foreign exchange exposure expected overthe period of the operative planning.
Furthermore, the Company is exposed to certain other pricerisks such as interest rate risks, changes in commodity prices
and in the price of its own stocks. Adverse movements of theseprices may jeopardise the Company’s profitability if not hedged.
Currency exchange rate fluctuations in currencies other than the
US dollar in which the Company incurs its principal manufacturing
expenses (mainly the euro) may affect the ability of the Company
to compete with competitors whose costs are incurred in othercurrencies. This is particularly true with respect to fluctuations
relative to the US dollar, as many of the Company’s products
and those of its competitors (e.g., in the defence export market)
are priced in US dollars. The Company’s ability to competewith competitors may be eroded to the extent that any of theCompany’s principal currencies appreciates in value against the
principal currencies of such competitors.
The Company’s consolidated revenues, costs, assets andliabilities denominated in currencies other than the euro aretranslated into the euro for the purposes of compiling its Financial
Statements. Changes in the value of these currencies relative
to the euro will, therefore, have an effect on the euro value of
the Company’s reported revenues, costs, EBIT, other financial
results, assets, liabilities and equity.

Sales Financing Arrangements
In support of sales, the Company may agree, case by case, toparticipate in the financing of selected customers. Over the last
three years on average (2018 to 2020), the average number ofaircraft delivered in respect of which financing support has been
provided by Airbus amounted to less than 1% of the average
number of deliveries over the same period.
The risks arising from the Company’s sales financing activities
may be classified into two categories: (i) credit risk, which
relates to the customer’s ability to perform its obligations
under a financing arrangement, and (ii) aircraft value risk, whichprimarily relates to unexpected decreases in the future valueof aircraft. Defaults by its customers or significant decreases
in the value of the financed aircraft in the resale market may
materially adversely affect the Company’s business, results ofoperations and financial condition.
The Company’s sales financing arrangements expose it toaircraft value risk, because it generally retains security interests
in aircraft for the purpose of securing customers’ performanceof their financial obligations to the Company, and/or because
it may guarantee a portion of the value of certain aircraft at
certain anniversaries from the date of their delivery to customers.
Under adverse market conditions, the market for used aircraft
could become illiquid and the market value of used aircraft could
significantly decrease below projected amounts. In the event ofa financing customer default at a time when the market value
for a used aircraft has unexpectedly decreased, the Company
would be exposed to the difference between the outstanding
loan amount and the market value of the aircraft, net ofancillary costs (such as maintenance and remarketing costs,etc.). Similarly, if an unexpected decrease in the market valueof a given aircraft coincided with the exercise window dateof an asset value guarantee with respect to that aircraft, theCompany would be exposed to losing as much as the difference
between the market value of such aircraft and the guaranteedamount, though such amounts are usually capped. Throughthe Airbus Asset Management department or as a result of
past financing transactions, the Company is the owner of usedaircraft, exposing it directly to fluctuations in the market valueof these used aircraft.

38

Airbus SE / Report of the Board of Directors 2020

In addition, the Company has backstop commitments to provide
financing related to orders on the Company’s and ATR’s backlog.
The Company’s sales financing exposure could rise in line with
future sales growth depending on the agreement reached withcustomers. The Company remains exposed to the risk of defaults
by its customers or significant decreases in the value of thefinanced aircraft in the resale market, which may have a negative
effect on its future financial condition and results of operations.

Liquidity
The Company is exposed to liquidity risk in case of funding needs
during a market disruption situation. The liquidity risk can arise
when money markets and debt capital markets are closed for
new issuances for a period of time. In order to mitigate this risk,
the Company maintains:–– significant amounts of highly liquid cash on-balance sheet;–– undrawn committed credit facilities;–– diversified Euro funding programmes (such as a € 12 billion
euro medium-term note (“EMTN”) programme eligible to the
Corporate Sector Purchase Programme of the European
Central Bank (“ECB”), a € 11 billion Negotiable European
Commercial Paper programme eligible to the Pandemic
Emergency Purchase Programme of the ECB, and a € 4 billion
Euro Commercial Paper programme eligible to the Covid
Corporate Financing Facility of the Bank of England); and–– access to USD funding (through a US$ 3 billion US Commercial
Paper programme, and a 144A US Dollar bond market).
On 23 March 2020, the Company announced measures
to bolster its liquidity and balance sheet in response to the
COVID-19 pandemic, including a new € 15 billion committed
credit facility (the “New Credit Facility”), the withdrawal of 2019
dividend proposal with cash value of € 1.4 billion, the suspensionof voluntary top up pension funding and strong focus on support
to customers and delivery.
On 31 March 2020, the Company priced a € 2.5 billion tripletranche bond transaction across 5, 8 and 12-year tenors in theEuro Debt Capital Markets out of its EMTN programme in order
to raise long term liquidity. The proceeds have been used topartially term out the € 15 billion credit facility.
On 2 June 2020, the Company priced a € 3.5 billion tripletranche bond transaction across 6, 10 and 20-year tenors in theEuro Debt Capital Markets out of its EMTN programme in orderto further raise long term liquidity. The proceeds have been used
to partially term out the € 15 billion credit facility.
On 21 October 2020, the Company cancelled its existing€ 3 billion revolving credit facility and signed a new € 6 billion
revolving credit facility with a tenor of three years in order toraise long term liquidity. The incremental portion of the newfacility has been used to partially term out the € 15 billion facility.

Counterparty Credit
In addition to the credit risk relating to sales financing as
discussed above, the Company is exposed to credit risk to theextent of non-performance by its counterparties for financial
instruments, such as hedging instruments (US$ 81 billion
nominal value at 31 December 2020) and cash investments(US$ 21.4 billion nominal value at 31 December 2020). However,
the Company has policies in place to avoid concentrations ofcredit risk and to ensure that credit risk exposure is limited.
Counterparties for transactions in cash, cash equivalents andsecurities as well as for derivative transactions are limited tohighly rated financial institutions, corporates or sovereigns.
The Company’s credit limit system assigns maximum exposurelines to such counterparties, based on a minimum credit rating4. Corporate Governance /4.6 Risk Factors

threshold as published by Standard & Poor’s and Moody’s.
If neither is present, Fitch ratings is used. Besides the credit
rating, the limit system also takes into account fundamental
counterparty data, as well as sector and maturity allocations

and further qualitative and quantitative criteria such as credit risk
indicators. The credit exposure of the Company is reviewed ona regular basis and the respective limits are regularly monitored
and updated.

As of 31 December 2020 the credit exposure had been estimated as follows (in € million):
Source of risk

Exposure

Unexpected Loss Contribution

Banks

4,722

143

Corporates

3,245

56

737

6

Sovereign Issuers
Money market funds

Total

The Company also seeks to maintain a certain level ofdiversification in its portfolio between individual counterparties aswell as between financial institutions, corporates and sovereignsin order to avoid an increased concentration of credit risk on only
a few counterparties.
However, there can be no assurance that the Company will not
lose the benefit of certain derivatives or cash investments incase of a systemic market disruption. In such circumstances, thevalue and liquidity of these financial instruments could decline
and result in a significant impairment, which may in turn have anegative effect on the Company’s financial condition and resultsof operations.
Moreover, the progressive implementation of new financial
regulations and adjustments to existing regulations (MiFiD II/
MiFIR, CRD4, Bank Restructuring Resolution Directive, etc.) will
have an impact on the business model of banks (for example,
the split between investment banking and commercial banking
activities) and on the capital structure and cost of such banks’
activities in relation to over-the-counter derivatives, andtherefore on the funding consequences of central clearing andcollateralisation of over-the-counter derivatives for corporations
like the Company. This may ultimately increase the cost andreduce the liquidity of the Company’s long-term hedges, forexample, as banks seek to either pass-on the additional costs
to their corporate counterparties or withdraw from low-profit
businesses altogether.

Pension Commitments
The Company participates in several pension plans for both
executive as well as non-executive employees, some of which
are underfunded. As of 31 December 2020, the provision
for retirement plans and similar obligations amounted to€ 20,543 billion. For information related to these plans, pleaserefer to the “Notes to the IFRS Consolidated Financial Statements– Note 32: Post-employment Benefits”. Although the Company
has recorded a provision in its balance sheet for its share of
the underfunding based on current estimates, there can be noassurance that these estimates will not be revised upward in the
future, leading the Company to record additional provisions in
respect of such plans.
Necessary adjustments of such provisions include but are notlimited to (i) the discount factor (dependent in part on interest rates)
and the inflation rate applied to calculate the net present value ofthe pension liabilities, (ii) the performance of the asset classes
which are represented in the pension assets, and (iii) behaviouralassumptions regarding beneficiaries, and (iv) additional cash
injections contributed by the Company from time to time to thepension assets. The Company has taken measures to reduce

9,486

16

18,189217

potential losses on the pension assets and to better matchthe characteristics of the pension liabilities with those of thepension assets as a long-term objective. Nevertheless, any
required additional provisions would have a negative effect on
the Company’s total equity (net of deferred tax), which could inturn have a negative effect on its future financial condition.

4.6.2 Business-Related Risks
COVID-19 Risks
New variants and the successive waves of the COVID-19
pandemic, the resulting health and economic crisis andactions taken in response to the spread of the pandemic,
including government measures, lockdowns, travel limitations
and restrictions, have resulted in significant disruption to theCompany’s business, operations and supply chain.
The aerospace industry, the financial health of operators, airlines,
lessors and suppliers, commercial aircraft market, demand for air
travel and commercial air traffic have been severely impacted by
the COVID-19 pandemic and the resulting health and economiccrisis. As a result, airlines have reduced capacity, grounded large
portions of their fleets for months, sought to implement measures
to reduce cash spending and secure liquidity. Some airlines
are also seeking arrangements with creditors, restructuring or
applying for bankruptcy or insolvency protection, which may
have further consequences for the Company and its orderbook as well as other consequences resulting from the related
proceedings. The Company will continue to face additionalrisks and uncertainties resulting from future consequences of
the health and economic crisis on operators, airlines, lessors,
suppliers and other actors in the air transport industry. See also“– Commercial Aircraft Market Factors” below.
In 2020, a number of measures have been taken by theCompany to implement stringent health and safety procedures
while taking account of stock levels and production lead-times.
In February 2020, the Company suspended operations of the
Tianjin Final Assembly Line for approximately one week but waslater authorised by the Chinese authorities to restart operations
and gradually increase production. In March and April 2020, theCompany temporarily suspended certain operations including
production and assembly activities at facilities in France, Spain,
Germany, UK, US and Canada. The COVID-19 crisis may lead tofurther disruptions to the Company’s internal operations and to its
ability to deliver products and services. See also “– Dependence
on Key Suppliers and Subcontractors” below.

Airbus SE / Report of the Board of Directors 2020

39

4. Corporate Governance /4.6 Risk Factors

In addition to its impact on the financial viability of operators,
airlines and lessors and the reduction of commercial air traffic,
lockdowns, travel limitations and restrictions around the world
have posed logistical challenges and may cause disruptions
to the Company’s business, its operations and supply chain.
These measures have and may continue to adversely affect theCompany’s ability to deliver products and services as well as
customers’ ability to take delivery of aircraft.
The Company is adversely affected by weak market andeconomic conditions in markets around the world. Protracted
weaker market and economic conditions and their knock-on
effects could result in (i) additional requests by customers topostpone delivery or cancel existing orders for aircraft (including
helicopters) or other products including services, (ii) decisions
by customers to review their fleet strategy, (iii) weak levelsof passenger demand for air travel and cargo activity moregenerally, (iv) a sustained reduction in the volume of air travelfor business purposes, and (v) prolonged or additional travel
limitations and restrictions, which could negatively impact theCompany’s results of operations.
The Company delivered 566 commercial aircraft in 2020, 34%
fewer than in 2019, in line with the Company’s adaptation plan.
This reflects customer requests to defer deliveries as well asother factors related to the ongoing COVID-19 crisis. In 2020,
the Company recorded 155 cancellations.
On 23 March 2020, the Company secured the New Credit
Facility in addition to the existing € 3 billion revolving credit
facility and withdrew its 2020 guidance due to the volatility ofthe situation. Given the continued impact of COVID-19 on thebusiness and the associated risks, no new guidance was issued
by the Company in 2020 on commercial aircraft deliveries or
EBIT.
On 8 April 2020, the Company announced its decision to adapt
commercial aircraft production rates to 40 per month for theA320 Family, two per month for A330 and six per month for
A350 in response to the new COVID-19 market environment.
This represented a reduction of the March 2020 pre-COVID-19
average rates of roughly one third. Subsequently the current
market situation led to a slight adjustment in the A350 ratefrom six to five aircraft a month for now. With these new rates,
the Company intended to preserve its ability to meet customer
demand while protecting its ability to further adapt as the global
market evolves.
On 30 June 2020, the Company announced plans to adapt its
global workforce, principally in France, Germany, Spain and theUK, and resize its commercial aircraft activity in response to the
COVID-19 crisis. This adaptation was expected to result in a
reduction of around 15,000 positions no later than summer 2021.
Working time adaptation and mitigation measures supportedby the governments have reduced the number of positions
subject to the restructuring plan. Taking into consideration theactual departures since the initial announcement, the remaining
number of positions subject to the restructuring plan amounts
to approximately 6,100 as of 31 December 2020, including
pre-retirement headcount under German Altersteilzeit (“ATZ”).
On 21 January 2021, the Company announced it is updating its
production rate planning for its A320 Family aircraft in responseto the market environment. The new average production rates
for the A320 Family will now lead to a gradual increase inproduction from the current rate of 40 per month to 43 in Q3
and 45 in Q4 2021. This latest production plan represents aslower ramp up than the previously anticipated 47 aircraft permonth from July 2021. The A220 monthly production rate will
increase from four to five aircraft per month from the end of Q1

40

Airbus SE / Report of the Board of Directors 20202021 as previously foreseen. Widebody production is expected
to remain stable at current levels, with monthly production rates
of around five and two for the A350 and A330, respectively.
This decision postponed a potential rate increase for the A350
to a later stage.
The Company continues to monitor the market closely. With
these revised rates, the Company preserves its ability to meetcustomer demand while protecting its ability to further adapt as
the global market evolves. The Company expects the commercial
aircraft market to return to pre-COVID levels by 2023 to 2025.
The Company is monitoring the evolution of the COVID-19 crisis
and will continue to evaluate further impacts and additional
measures going forward while taking into account the latest
industry outlook.
Although the full impact of the COVID-19 pandemic and theresulting health and economic crisis cannot reasonably beassessed at this time given its uncertain duration and extent, theCompany’s business, its operations and supply chain are likely
to be further disrupted by new variants and successive waves ofthe pandemic, the uncertainty it creates and the resulting healthand economic crisis.
The Company’s business, results of operations and financial
condition have been and will continue to be materially affectedby the COVID-19 pandemic, and the Company continues to facesignificant risks and uncertainties related to new variants andsuccessive waves of the COVID-19 pandemic and its resulting
health and economic crisis.

Commercial Aircraft and Helicopter
Market Factors
Historically, the Company has experienced that order intake forcommercial aircraft has shown cyclical trends, due in part tochanges in passenger demand for air travel and the air cargoshare of freight activity, which are in turn driven by a range of
economic variables, such as GDP growth, private consumption
levels or working age population size. Other factors, however,play an important role in determining the market for commercial
aircraft, such as (i) the average age and technical obsolescence ofthe 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 and freight load factors;(iv) airline pricing policies and resultant yields; (v) airline financial
health; (vi) the availability of third party financing for aircraft
purchases; (vii) evolution of fuel price; (viii) regulatory environment;(ix) environmental constraints imposed upon aircraft operations,such as the Carbon Offsetting and Reduction Scheme forInternational Aviation (“CORSIA”), carbon standards and otherenvironmental taxes; and (x) market evolutionary factors such as
the volume of business-related travel or the growth of low-costpassenger airline business models or the impact of e-commerceon air cargo volumes. The COVID-19 pandemic and resulting
health and economic crisis may amplify the impact of thesefactors.
The factors described above may have a material impact on thecommercial aircraft industry and therefore, on the Company’s
financial condition and results of operations. In 2020, thecommercial aircraft business segment of Airbus recorded total
revenues of € 34.97 billion – representing 68% of the Company’s
revenues. The significant growth of our commercial aircraftbusiness relative to our Defence, Space and Government
activities has diluted the latter’s ability to serve as an effective
tool to counter commercial cycles.

4. Corporate Governance /4.6 Risk Factors

The commercial helicopter market in which the Company
operates has shown cyclical trends and could also be influenced
by factors listed above. In addition, the civil & parapublic and inparticular the oil & gas market softness has led to, and may infuture lead to, a postponement of investments in the acquisitionof new platforms and a reduction of flight hours. The uncertainty
on the lead time of the civil & parapublic market recovery may
have an impact on Airbus Helicopters’ financial results and could
lead to cancellations or loss of bookings and services.

Cyber Security Risks
The Company’s extensive information and communications
systems, industrial environment and products are exposed tocyber security risks. Cyber security threats are rapidly changing
and scenarios of attacks are becoming more sophisticated.
The Company is exposed to a number of different cyber security
risks, directly or through its supply chain, arising from actions that
may be intentional and hostile, accidental or negligent. Intrusion
in systems, leakage of information or theft including industrial
espionage, sabotage, destabilisation, corruption and availabilityof data are the main cyber security risks that the Company faces.
All of the above mentioned risks are heightened in the context of
the increasingly common use of digital solutions by the Company(including greater use of cloud services, mobile devices, “internetof things”), increasingly capable adversaries and integration withthe extended enterprise. Risks related to the Company’s industrial
control systems, manufacturing processes and products are
growing with the increase of interconnectivity and digitalisation.
Moreover, a main challenge is to maintain an appropriate levelof security of complex and legacy industrial systems to faceattacks from hackers who are improving their techniques andskills at incredible speed.
Finally, the Company is exposed to reputational damage anddestabilisation from the growing volume of false and malicious
information injected to media and social networks.
While the Company continues to make significant efforts
to prevent such risks from materialising, making targeted
investments will reduce but not eradicate likelihood and impact
through strengthening the business cyber resilience.
The materialisation of one or several of such risks could lead tosevere damage including but not limited to significant financial
loss, need for additional investment, contractual or reputational
performance degradation, loss of intellectual property, loss ofbusiness data and information, operational business degradation
or disruptions, and product or services malfunctions.

Physical Security, Terrorism, Pandemics
and Other Catastrophic Events
Past terrorist attacks, public health crises and the spreadof disease (such as the global COVID-19 pandemic or the
H1N1 flu pandemic or the Ebola epidemic in 2013-2016) havedemonstrated that such events may negatively affect public
perception of air travel safety, which may in turn reduce demand
for air travel and commercial aircraft. The outbreak of wars,
riots or political unrest or uncertainties may also affect thewillingness of the public to travel by air. Furthermore, major
aircraft accidents may have a negative effect on the public’s orregulators’ perception of the safety of a given class of aircraft,a given airline, form of design or air traffic management. Flightactivity restart requires particular focus on safety aspects suchas aircraft destorage, pilot training. As a result of such factors,
the aeronautic industry may be confronted with additionalsudden or prolonged reduced demand for air transportation
and be compelled to take additional costly security and safetymeasures. The Company may, therefore, suffer from a decline indemand for all or certain types of its aircraft or other products,
and the Company’s customers may postpone delivery or cancel
orders.
In addition to affecting demand for its products, catastrophic
events could disrupt the Company’s internal operations or
its ability to deliver products and services. Disruptions may
be related to threats to infrastructure, personnel security andphysical security and may arise from terrorism, natural disasters,
fire, damaging weather, and other types of incidents such as
drone air traffic disruption. Effects of such events may be
amplified if they happen on Single Points Of Failure (SPOFs) for
which dedicated identification and mitigations are monitored.
Any resulting impact on the Company’s production, services
or information systems could have a significant adverse effecton the Company’s operations, financial condition and results ofoperations as well as on its reputation and on its products andservices.

Dependence on Key Suppliersand Subcontractors
The Company is dependent on numerous key suppliers andsubcontractors to provide it with the raw materials, parts,
assemblies, systems, equipment and services that it needs tomanufacture its products.
The Company relies upon the good performance and financial
health of its suppliers and subcontractors to meet the obligations
defined under their contracts. A supplier’s performance andhealth may be negatively impacted by a variety of topics including
a concentrated customer base and the COVID-19 pandemic andthe resulting health and economic crisis.
The Company cannot fully protect itself from non-performance ofa supplier which could disrupt production and in turn may have anegative effect on its financial condition and results of operations.
Changes to the Company’s production or development
schedules may impact suppliers so that they initiate claims under
their respective contracts for financial compensation. This may
have a negative effect on the financial condition and results ofoperations of the Company.
As the Company’s global sourcing footprint extends, some
suppliers (or their sub-tier suppliers) may have production facilities
located in countries that are exposed to socio-political unrest
or natural disasters which could interrupt deliveries. This may
have a negative effect on the financial condition and results ofoperations of the Company.
The COVID-19 pandemic and the resulting health and economiccrisis has increased the Company’s exposure to supply chain
disruption risk. A reinforced governance has been implemented
to manage the potential impacts.

Industrial System Adaptation
As a result of the COVID-19 pandemic and the resulting healthand economic crisis and its impact on airlines operations,deliveries of aircraft have been adapted, leading the Company
to reduce production rates. In 2020, the Company adapted the
production rates on A320 family to rate 40 per month, on the
A350XWB programme to rate 5, on the A330 programme torate 2, and on the A220 programme to rate 3 in Mirabel and torate 1 in Mobile. In January 2021, the Company announced it isAirbus SE / Report of the Board of Directors 202041

4. Corporate Governance /4.6 Risk Factors

updating its production rate planning for its A320 family aircraft
to rate 43 in Q3 2021 and rate 45 in Q4 2021. The Company willcontinue to monitor and adapt according to traffic evolutions.
Hence, the Company is engaged in a process to adapt its
industrial set-up to the new rates. This process is addressing
the resource adaptation (headcount, skills & competencies) andthe fixed cost reduction (industrial facilities, IT systems) which,in case of non-sufficient decrease, would affect production
costs. It has to ensure as well that the lead time increase, as aneffect of rate reduction, will be fully compensated by industrial
adaptations hence protecting inventory level and lead-time
between Aircraft configuration chosen by our customer andAircraft delivery. This encompasses the full industrial processfrom supply chain (including raw material, subcontracted work
packages, equipment, etc.) to aircraft delivery. In this process,the Company focuses attention on quality industrial adherence.
All of these adaptations within industrial assets and resources will
have to be led in due balance to remain compatible with further
ramp-up needs to cope with airline future demand.
For more details on specific programme risks, see “– ProgrammeSpecific Risks” below.

Technologically Advanced Products
and Services
The Company offers its customers products and services thatare technologically advanced, so the design, manufacturing,components and materials utilised can be complex and require
substantial integration and coordination along the supply chain.
In addition, most of the Company’s products must function underdemanding operating conditions. Throughout the lifecycle ofits products, the Company performs checks and inspections,which may result in modifications, retrofits or other corrective
actions, each of which may have an adverse effect on production,
operations, in-service performance or financial condition. Therecan be no assurance that the Company’s products or services
will be successfully developed, manufactured or operated or thatthey will perform as intended.
Certain of the Company’s contracts require it to forfeit part ofits expected profit, to receive reduced payments, to provide a
replacement launch or other products or services, to provide
cancellation rights, or to reduce the price of subsequent sales
to the same customer if its products fail to be delivered ontime or to perform adequately. No assurances can be giventhat performance penalties or contract cancellations will not be
imposed should the Company fail to meet delivery schedules
or other measures of contract performance – in particularwith respect to development programmes such as the A220,
A350‑900 and -1000 XWB, A400M, H175, H160 or Ariane 6 andto modernisation programmes such as the A320neo and theA330neo. See “– Programme-Specific Risks” below.
In addition to the risk of contract cancellations, the Company
may also incur significant costs or loss of revenues in connection
with remedial action required to correct any performance issues
detected in its products or services. Moreover, to the extent thata performance issue is considered to have a possible impact
on safety, regulators could suspend the authorisation for theaffected product or service.
Any significant problems with the development, manufacturing,
operation, performance or safety of the Company’s products
and services could have a significant adverse effect on the
Company’s financial condition and results of operations as well ason the reputation of the Company and its products and services.

42

Airbus SE / Report of the Board of Directors 2020

Dependence on Public Spending
and on Certain Markets
In any single market, public spending (including defence andsecurity spending) depends on a complex mix of geopoliticalconsiderations and budgetary constraints, and may therefore be
subject to significant fluctuations from year to year and country
to country. Any termination or reduction of future funding orcancellations or delays impacting existing contracts may have anegative effect on the Company’s financial condition and resultsof operations. In instances where several countries undertaketo enter together into defence or other procurement contracts,
economic, political or budgetary constraints in any one ofthese countries may have a negative effect on the ability of theCompany to enter into or perform such contracts.
The Company has a geographically diverse backlog. Adverse
economic and political conditions, as well as downturns in broad
economic trends in certain countries or regions, may have anegative effect on the Company’s financial condition and resultsof operations generated in those regions.

Availability of Government
and Other Sources of Financing
From 1992 to 2004, the European Union and the US operated
under an agreement that sets the terms and conditions offinancial support that governments may provide to civil aircraft
manufacturers. In late 2004, however, the US unilaterally withdrew
from this agreement, which eventually led to the US and theEuropean Union making formal claims against each other before
the World Trade Organization (“WTO”). While both sides haveexpressed a preference for a negotiated settlement that provides
for a level playing field when funding future aircraft developments,
they have thus far failed to reach agreement on key issues.
Separately, Brazil has initiated WTO proceedings citing Canadian
support to the C Series aircraft, the aircraft that the Company
manufactures, markets and supports as the A220 aircraft underthe Airbus Canada Limited Partnership (prior to 1 June 2019
known as the C Series Aircraft Limited Partnership (“CSALP”))
agreement, finalised in 2018. Here too, a negotiated outcome
would be preferable. Domestic proceedings in the US based onalleged subsidies to the C Series were dismissed.
On 18 October 2019, the US imposed, among other targeted
goods, a tariff of 10% on new aircraft exported from theEuropean Union to the US. On 14 February 2020, the USTR
announced the US is increasing the additional duty rate imposedon aircraft imported from the EU to 15%, effective 18 March
2020. The Company’s deliveries to the US from the final
assembly line (“FAL”) in Mobile are exempted from tariffs. On
30 December 2020, USTR announced the US would impose
a tariff of 15% on imports of aircraft manufacturing parts from
France and Germany delivered to the final assembly line in Mobile,
Alabama. The tariffs could have a material impact on the Financial
Statements, business and operations of the Company. Duties
on the importation of the Company’s products into the US could
result in (i) increased costs for the aerospace and airline industries
as well as other industries that rely on air transport, (ii) weakening
demand for new aircraft and negatively affecting the financial
condition of air carriers and lessors, (iii) decisions to defer, rejector reschedule the delivery of new aircraft or limit the routes uponwhich new aircraft will be used, (iv) increased costs to consumers,
and/or (v) damage to the Company’s business or reputation via
negative publicity adversely affecting the Company’s prospects
in the commercial market place. See WTO in “– Legal Risks– Legal and Regulatory Proceedings” and please refer to the“Notes to the IFRS Consolidated Financial Statements – Note 39:
Litigation and Claims”.

4. Corporate Governance /4.6 Risk Factors

In March 2019, the WTO found that the steps by the US to address
US subsidies to Boeing were inadequate. In October 2020, theWTO announced its decision to authorise the EU to impose
US$ 4 billion in annual countermeasures. In November 2020, theEU imposed tariffs on a range of imports to the EU from the US
including 15% on the importation of large civil aircraft from the US.
In prior years, the Company and its principal competitors
have each received different types of government financing ofproduct research and development. However, no assurances
can be given that government financing will continue to be madeavailable in the future, in part as a result of the proceedings
mentioned above. The terms and conditions of any new
agreement, or the final outcome of the formal WTO or othertrade law proceedings, may limit access by the Company to risksharing funds for large projects, may establish an unfavourable
balance of access to government funds by the Company ascompared to its US competitors or may in an extreme scenariocause the involved governments to analyse possibilities for achange in the commercial terms of funds already advanced to
the Company. Moreover, the availability of other outside sourcesof financing will depend on a variety of factors such as market
conditions, the general availability of credit, the Company’s credit
ratings, as well as the possibility that lenders or investors could
develop a negative perception of the Company’s long- or shortterm financial prospects if it incurred large losses or if the levelof its business activity decreased due to an economic downturn.
The Company may, therefore, not be able to successfully obtain
additional outside financing on appropriate terms, or at all,which may limit the Company’s future ability to make capital
expenditures, fully carry out its research and development efforts
and fund operations.

Competition and Market Access
The markets in which the Company operates are highly
competitive. With regard to the Company’s commercial aircraftbusiness for aircraft with more than 150 seats, the Company today
operates in a competitive duopoly. The design, development
and production of commercial aircraft involves high barriers
to entry (including certification requirements, large investment
needs, skilled competencies and access to technology) andthe two main market participants have secured significant orderbacklogs.
New players are operating or seeking to operate in the
Company’s existing markets, which may impact the structure
and profitability of these markets. In addition, enterprises withdifferent business models and alternative technologies could
substitute the Company’s services and some of its products orcomponent parts thereof. In some areas, competitors may havemore extensive or more specialised engineering, manufacturingand marketing capabilities. There can be no assurance that theCompany will be able to compete successfully against its current
or future competitors or that the competitive pressures it faces
in all business areas will not result in reduced revenues, market
share or profit. See “– Environment, Human Rights, Health and
Safety Risks – Climate-Related Risks” below.
In addition, some of the Company’s largest customers and/or
suppliers may develop the capability to manufacture products
or provide services similar to those of the Company. This would
result in these customers/suppliers marketing their own products
or services and competing directly with the Company for salesof these products or services, all of which could significantly
reduce the Company’s revenues.
In addition, the contracts for many aerospace and defence
products are awarded, implicitly or explicitly, on the basis of homecountry preference. Although the Company is a multinational
company which helps to broaden its domestic market, it may

remain at a competitive disadvantage in certain countries,
especially outside of Europe, relative to local contractors forcertain products. The strategic importance and political sensitivity
attached to the aerospace and defence industries means thatpolitical considerations will play a role in the choice of many
products for the foreseeable future.

Major Research and Development
Programmes
The business environment in many of the Company’s principal
operating business segments is characterised by extensive
research and development costs requiring significant up-front
investments with a high level of complexity. For the year 2020,
research and development expenses were € 2.9 billion. For theyear 2019, research and development expenses were € 3.4 billion(compared to € 3.2 billion for the year 2018, mainly reflecting
development cost on the A320neo).
Due to the technologically advanced complex nature of the
products that the Company produces and the long period,
including ramp up time, it takes to produce them, the businessplans underlying such investments often contemplate a long
payback period before these investments are recouped, andassume a certain level of return over the course of this period inorder to justify the initial investment. There can be no assurancesthat the commercial, technical and market assumptions
underlying such business plans will be met, and consequently,
the payback period or returns contemplated therein achieved.
Significant technological, skills and industrial challenges exist
to achieve the Company’s sustainability ambitions for the future
generations of aviation. These ambitions require cross industry
and cross government collaboration to address the technologicalrisks that need to be overcome. See “– Environment, Human
Rights, Health and Safety Risks – Climate-Related Risks” below.
Successful development of new programmes also depends on
the Company’s ability to attract and retain aerospace engineers
and other professionals with the technical skills and experience
required to meet its specific needs. Demand for such engineers
may often exceed supply depending on the market, resulting in
intense competition for qualified professionals. The Company’s
attrition rate in 2020 was 5.8% overall (including subsidiaries) and9.4% in subsidiaries only (compared to 4.4% overall and 8.43%
in subsidiaries only in 2019). There can be no assurances that
the Company will attract and retain the personnel it requires to
conduct its operations successfully and in particular to attract
and retain aerospace engineers and other professionals withthe technical skills and experience required for its research anddevelopment programmes. Failure to attract and retain such
personnel or an increase in the Company’s employee turnoverrate could negatively affect the Company’s financial condition andresults of operations more generally and particularly its ability tosuccessfully execute its research and development programmes.
There is a risk of additional repercussions from COVID-19’s
impact on skills and expertise. Significant effort has been taken
to maintain key resources and support the increased departureof skilled staff with improved knowledge management andknowledge transfer schemes across the Company.
The COVID-19 crisis has the potential to impact key company
technological developments and competencies, but despite thisrisk the Company continues seeking to further its developmentin sustainable technologies. This commitment directs a significant
proportion of the longer term technology research efforts for
future products and services and is based on solving complex
trades backed by exploring multiple technology pathways.
Retaining this ambitious programme is achieved with national
research funding through frameworks such as CORAC, LUFO,

Airbus SE / Report of the Board of Directors 202043

4. Corporate Governance /4.6 Risk Factors

ATI, CDTI and Horizon Europe where the frameworks enable
the Company and the wider aviation ecosystem to mature anddevelop the required key competencies and technologies.
No assurance can be given that the Company will achieve
the anticipated level of returns from these programmes andother development projects, which may negatively affect theCompany’s financial condition and results of operations andcompetitiveness.
In the context of the post-Brexit relationship between the UK
and the European Union, there is a risk that the Company mightlose access to pooled expertise and knowledge and could facedisruptions within its interdependent and extensively integrated
research and innovation networks across the UK and theEuropean Union countries. The Company may also face lack of
certainty with respect to intellectual property rights for existingor new programmes and established or potential partnerships
with private or public organisations, academic institutions andresearch councils, charities and government departments, where
the relevant intellectual property frameworks or user-rights/
ownership governing those relationships is dependent on the
UK’s status as a member state of the European Union.

Acquisitions, Divestments, Joint Ventures
and Strategic Alliances
As part of its business strategy, the Company may acquire ordivest businesses and/or form joint ventures or strategic alliances.
Executing acquisitions and divestments can be difficult and costly
due to the complexities inherent in integrating or carving out
people, operations, technologies and products. There can be noassurance that any of the businesses that the Company intends
to acquire or divest can be integrated or carved out successfully,
as timely as originally planned or that they will perform welland deliver the expected synergies or cost savings once
integrated or separated. In addition, regulatory, administrativeor other contractual conditions can prevent transactions frombeing finalised. Each acquisition, divestment, joint venture andstrategic alliance is very specific in its nature, purpose, risk andopportunities. The Company identifies risks through a detailed
and systematic due diligence process and addresses the risks
identified through price mitigation and/or appropriate contractual
coverage, such as indemnification mechanisms, both being the
tailored-made results of complex negotiations with the sellers/
buyers and/or partners. The Company’s business, results ofoperations and financial condition may be materially affected if
these transactions will not be successfully completed or do not
produce the expected benefits.

Public-Private Partnerships and Private
Finance Initiatives
Defence customers may request proposals and grant contracts
under schemes known as public-private partnerships (“PPPs”).
PPPs 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 a party
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 additionalcustomers for unused capacity.

44

Airbus SE / Report of the Board of Directors 2020

The Company is party to PPP and private finance initiatives (“PFI”)
contracts, for example Skynet 5 and related telecommunications
services, and in the AirTanker (FSTA) project both with the UK
Ministry of Defence. One of the complexities presented by PFIs
lies in the allocation of risks and the timing thereof among different
parties over the life-time of the project.
There can be no assurances of the extent to which the Company
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.
The Company may also encounter unexpected political,
budgetary, regulatory or competitive risks over the long durationof PPP and PFI programmes.

Programme-Specific Risks
In addition to the risk factors mentioned above, the Company
also faces the following programme-specific risks that could
have a material impact on the Company’s business, results ofoperations and financial condition.
The Company faces the following main challenges on its
commercial programmes:–– adapt to rate and stabilise operational performance postCOVID-19 while maintaining high safety and quality standards;–– monitor and support the supply chain;–– accompany customers and facilitate deliveries to customers
including by remote delivery process;–– ensure a strong customer focus to support return to operations;and–– protect priority projects and deliver developments as per
revised plan including A321XLR, A350 Step7 (Standard 2022),
Airspace, A330-800, A330-900 251t MTOW, and Digital(DDMS and Skywise).
A320 Family programme. In response to the new COVID-19
market environment, the commercial aircraft production rate for
the A320 Family was adapted to 40 per month in June 2020.
In January 2021, the Company announced demand for the A320
Family is expected to lead to a gradual increase in production
from the current rate of 40 per month to 43 in Q3 and 45 in
Q4 2021. The Company monitors proactively and constantly
the backlog, the internal and external supply chain, including
engines, so as to ensure readiness for further rate adaptationsin accordance with traffic evolution, to minimise inventory levels,and secure aircraft storage capacity.
A400M programme. After the Company signed a contract
amendment to restructure the contract, risks remain on
development of technical capabilities (development effort as wellas possible commercial agreement associated costs in order toreach Type Acceptance) and the associated costs, on securing
sufficient export orders in time, on aircraft operational reliability
in particular with regards to powerplant and on cost reductions
as per the revised baseline.
For further information, please refer to the “Notes to the IFRS
Consolidated Financial Statements – Note 23: Revenue and
Gross Margin”.
A350 XWB programme. In connection with the A350 XWB
programme, the Company faces the following main challenges:
to secure revised quarterly delivery targets post-COVID-19,
monitor and support the supply chain, reduce recurring costs toimprove competitiveness within a widebody market recovering ata slower pace and deliver Step 7 as per adapted plan. Decisions
on further rate adaptation will depend on traffic evolution.

4. Corporate Governance /4.6 Risk Factors

A380 programme. In connection with the A380 programme,
the Company faces the following main challenges: programme
wind-down, delivery of remaining A380s and secure in service
support for next decades.
A330 programme. In response to the new COVID-19 market
environment, the commercial aircraft production rate for theA330 programme was adapted to two per month in June 2020.
In connection with the A330 programme, the main challenges
the Company faces are to secure revised delivery targets postCOVID-19, monitor and support the supply chain. Decisions
on further rate adaptation will depend on traffic evolution.
The developments were on track in 2020: A330-800 was certified
in February 2020, A330-900 251t MTOW was certified early
October 2020 with a first delivery in November 2020 to Kuwait
Airlines.
A220 programme. In connection with the A220 programme,
the main challenges the Company faces are to secure the A220
cost reduction trajectory with a strong focus on Design to Cost
roadmap, and to ensure an A220 book to bill above one to fillcurrent open slots. As a consequence of the COVID-19 pandemic,
the commercial aircraft production rates were adapted in Mirabel
to three per month and in Mobile to one per month in 2020.
Similar to A320neo programme, attention will remain high on
Pratt & Whitney engine maturity in service.
H225 and H215 programme. Airbus Helicopters continues
to drive improvements across its product range as part of its
commitment to raise safety standards and increase the robustness
and reliability of dynamic components. The H225 programme
faces a challenge with the supply chain in a COVID-19 context.
H175 programme. In connection with the H175 programme
produced in cooperation with Avic, the Company faces thefollowing main challenge: a tough market environment on its
main offshore segment.
NH90 and Tiger programmes. In connection with multiple
fleets in service, the NH90 programme faces the challenge ofassuring support readiness while working on the deliveries ofcontracts signed in 2019. The Tiger MKIII contract is critical to
the future of the programme and requires alignment with OCCAR(Organisation conjointe de coopération en matière d’Armement /Organisation for Joint Armament Co-operation), Germany
and Spain. The NH90 programme faces a challenge with the
supply chain in a COVID-19 context. Through the dedicatedtransformation plan launched on the NH90 and maintenanceimprovement plan initiated on the Tiger, the Company aims to
reduce the maintenance burden and improve fleet serviceability.
H160 programme. The main challenge for the H160 programmeis to secure the FAA certification despite the COVID-19 travel
restrictions that impact negatively flight and training assessment.
Even if significant de-risking has been achieved, the finalisationof post-type certificate activities is the priority to ensure thesuccess of the entry into service. Direct Maintenance Cost of
the helicopter, Product cost reduction and industrial ramp-up
are key challenges.
Border security. In connection with border security projects,
the Company faces the following main challenges: meeting theschedule and cost objectives taking into account the complexityof the local infrastructures to be delivered and the integration ofcommercial-off-the-shelf products (radars, cameras and othersensors) interfaced into complex system networks; assuring
efficient project and staffing; managing the rollout including
subcontractors and customers. Negotiations on change requests
in this respect along with schedule re-alignments remain ongoing.
However, the repeatedly prolonged suspension of defence
export licenses to Saudi Arabia by the German Government
has significantly impacted the Company’s ability to deliver
the project and is still significantly jeopardising the customer

relationship. As a result of the consequential inability of theCompany to execute the full scope of the customer contract, arevised Estimate at Completion (EAC) was performed. As a resulta € 221 million impairment charge mainly on inventories on top ofa € 112 million financial expense related to hedge ineffectiveness,have been recognised as of 30 September 2019. The Company
continues to engage with its customer to agree a way forward
on this contract. The outcome of these negotiations is presently
unclear but could result in significant further financial impacts.

4.6.3 Legal Risks
Legal and Regulatory Proceedings
The Company is currently engaged in a number of active legal
and regulatory proceedings.
For example, the WTO litigation, which is described in “– Risk
Factors – Business-Related Risks – Availability of Government andother Sources of Financing”, is ongoing. For further information on
the WTO litigation and trade dispute, please refer to the “Notes tothe IFRS Consolidated Financial Statements – Note 39: Litigation
and Claims” (WTO).
For the investigation by the UK SFO, France’s PNF, and the US
Departments of State (“DoS”) and Justice, which is describedin “– Risk Factors – Legal Risks – Anti-Corruption Laws andRegulations”, the Company has reached an agreement with theauthorities, which was approved by the French and UK courtsand US court and regulator on 31 January 2020. The agreement
resulted in a fine totalling € 3.6 billion plus costs to the French, UK,
and US authorities. For further information about the investigation,please refer to the “Notes to the IFRS Consolidated Financial
Statements – Note 39: Litigation and Claims” (Investigation by
the UK SFO, France’s PNF, and US Departments of State andJustice and Related Commercial Litigation).
The Company expects to continue to spend time and incur
expenses associated with its defence of legal and regulatory
proceedings, regardless of the outcome, and this may divert
the efforts and attention of management from normal business
operations. Although the Company is unable to predict theoutcome of these proceedings, it is possible that they will result in
the imposition of damages, fines or other remedies, which could
have a material effect on the Company’s business, results ofoperations and financial condition. An unfavourable ruling could
also negatively impact the Company’s stock price and reputation.
In addition, the Company is from time to time subject to government
inquiries and investigations of its business and competitiveenvironment due, among other things, to the heavily regulated
nature of its industry. In addition to the risk of an unfavourable
ruling against the Company, any such inquiry or investigation
could negatively affect the Company’s reputation and its ability
to attract and retain customers and investors, which could have anegative effect on its business, results of operations and financial
condition. See “– Non-Financial Information – Exemplify Business
Integrity – 6.1.5 Ethical Business Practices”.

Anti-Corruption Laws and Regulations
The Company is required to comply with applicable anti-bribery
laws and regulations in jurisdictions around the world where it
does business. To that end, an anti-corruption programme has
been put in place that seeks to ensure adequate identification,assessment, monitoring and mitigation of corruption risks.
Despite these efforts, ethical misconduct or non-compliance withapplicable laws and regulations by the Company, its employees
or any third party acting on its behalf could expose it to liabilityor have a negative impact on its business.

Airbus SE / Report of the Board of Directors 202045

4. Corporate Governance /4.6 Risk Factors

The Company may be subject to administrative, civil or criminal
liabilities including significant fines and penalties, as well as
suspension or debarment from government or non-government
contracts for some period of time. The Company may also
be required to modify its business practices and complianceprogramme and/or have a compliance monitor imposed on it.
Any one or more of the foregoing could have a significant adverse
effect on the Company’s reputation and its business, results ofoperations and financial condition.
In 2016, for example, the Company announced that it had
discovered misstatements and omissions in certain applications
for export credit financing for the Company’s customers, andhad engaged legal, investigative and forensic accounting
experts to conduct a review. Separately, the UK SFO announced
that it had opened a criminal investigation into allegations offraud, bribery and corruption in the civil aviation business of
the Company, relating to irregularities concerning third party
consultants. The Company was subsequently informed that
the French authorities, the PNF, had also opened a preliminary
investigation into the same subject and that the two authorities
will act in coordination going forward. The Company engaged
with the government of the US (DoS and DoJ) relating to conduct
forming part of the SFO/PNF investigation that could fall within
US jurisdiction. The Company also engaged with the governmentof the US concerning potential issues of ITAR Part 130 and
related matters. On 31 January 2020, the French and UK courtsand US court and regulator approved an agreement reachedby the Company with the authorities. Any breach of the termsof the agreements by the Company could lead to rescission by
the authorities of the terms of the agreements and reopeningof the prosecutions. Prosecution could result in the impositionof further monetary penalties or other sanctions including
additional tax liability and could have a material impact on the
Financial Statements, business and operations of the Company.
The agreements reached with authorities may lead to additionalcommercial litigation and arbitration against the Company andtax liability in the future, which could have a material impact
on the Financial Statements, business and operations of theCompany. For further information, please refer to the “Notes tothe IFRS Consolidated Financial Statements – Note 39: Litigation
and Claims”.

Export Controls Laws and Regulations
The export market is a significant market for the Company.
In addition, many of the products the Company designs andmanufactures for military use are considered to be of national
strategic interest. Consequently, the export of such products
outside of the jurisdictions in which they are produced may be
restricted or subject to licensing and export control requirements,
notably by the UK, France, Germany and Spain, where theCompany carries out its principal activities relating to military
products and services as well as by other countries where
suppliers are based, notably, the US. There can be no assurance(i) that the export controls to which the Company is subject will
not become more restrictive, (ii) that new generations of theCompany’s products will not also be subject to similar or more
stringent controls or (iii) that geopolitical factors or changing
international circumstances will not make it impossible toobtain export licenses for one or more clients or constrain the
Company’s ability to perform under previously signed contracts.
Reduced access to military export markets may have a significant
adverse effect on the Company’s business, results of operations
and financial condition.
Operating worldwide, the Company must comply with several,
sometimes inconsistent, sets of sanctions laws and regulations
implemented by national/regional authorities. Depending on
geopolitical considerations including national security interests

46

Airbus SE / Report of the Board of Directors 2020and foreign policy, new sanctions regimes may be set up or thescope of existing ones may be widened, at any time, immediately
impacting the Company’s activities.
Although the Company seeks to comply with all such laws andregulations, even unintentional violations or a failure to comply
could result in suspension of the Company’s export privileges,or preclude the Company from bidding on certain government
contracts (even in the absence of a formal suspension or
debarment).
Furthermore, the Company’s ability to market new products andenter new markets may be dependent on obtaining government
certifications and approvals in a timely manner.

Dependence on Joint Ventures
and Minority Holdings
The Company generates a proportion of its results through various
consortia, joint ventures and equity holdings. The Company
recognises its share in the results of its equity holdings in the
proportion of the stake held. In 2020, the Company’s total shareof result from these arrangements amounted to € 39 million(compared to € 299 million in 2019). The Company’s individuallymaterial joint ventures are ArianeGroup (50%), MBDA (37.5%)
and ATR GIE (50%). For further information, please refer tothe “Notes to the IFRS Consolidated Financial Statements– Note 9: Investments Accounted for under the Equity Method”
and “– Note 16: Share of Profit from Investments Accounted forunder the Equity Method and Other Income from Investments”.
The formation of partnerships and alliances with other market
players is an integral strategy of the Company, and the proportionof sales generated from consortia, joint ventures and equity
holdings may rise in future years. This strategy may from time totime lead to changes in the organisational structure, or realignment
in the control, of the Company’s existing joint ventures.
The Company exercises varying and evolving degrees of control
in the consortia, joint ventures and equity holdings in which it
participates. While the Company seeks to participate onlyin ventures in which its interests are aligned with those of its
partners, the risk of disagreement or deadlock is inherent in ajointly controlled entity, particularly in those entities that require
the unanimous consent of all members with regard to majordecisions and specify limited exit rights. The other parties in these
entities may also be competitors of the Company, and thus may
have interests that differ from those of the Company.

Product Liability and Warranty Claims
The Company designs, develops and produces a number of highprofile products of large individual value, particularly civil andmilitary aircraft and space equipment. The Company is subject
to the risk of product liability and warranty claims in the eventthat any of its products fails to perform as designed. While theCompany believes that its insurance programmes are adequate
to protect it from such liabilities, no assurances can be given thatclaims will not arise in the future or that such insurance coverage
will be adequate.
The Company follows a policy of seeking to transfer the insurable
risk of the Company to external insurance markets at reasonablerates, on customised and sufficient terms and limits as provided
by the international insurance markets. The insurance industry
remains unpredictable. There may be future demands tochange scope of coverage, premiums and deductible amounts.
No assurance can be given that the Company will be able tomaintain its current levels of coverage nor that the insurance
coverages in place are adequate to cover all significant risk
exposure of the Company.

4. Corporate Governance /4.6 Risk Factors

Any problems in this respect may also have a significant adverse
effect on the reputation of the Company and lead to a decline
in demand for its products and services. Any reputational
damage faced by the Company may be exacerbated due to theCompany’s visibility.

4.6.4 Environment, Human
Rights, Health& Safety Risks

The Company cannot predict at this time the impact on it asa result of any product liability or warranty claims as such will
depend on the nature and size of any such claim.

Climate-Related Risks

Intellectual Property
The Company continuously seeks to develop and deliver new
products to meet customers’ evolving needs, while also improving
its existing product lines. Technological innovation has been at thecore of the Company’s strategy since its creation. The Company’s
innovations often provide distinct competitive advantages, withmany becoming standard in the aircraft industry. In addition,
the Company designs, develops and produces a number ofhigh profile products of large individual value, particularly civil
and military aircraft and space equipment. Therefore, intellectual
property (“IP”) is one of the Company’s most valuable assets
and the protection of IP is critical to its business.
The Company relies upon patents, copyright, trademark,confidentiality and trade secret laws, and agreements with its
employees, customers, suppliers and other parties, to establish
and maintain its IP rights in its products and services and in its
operations. In a typical year, the Company files around 800 newpriority-establishing patent applications and files globally around
1,600 national patent applications in global markets where it seeks
to protect its technology assets. The Company has granted patents
for around 10,500 individual technologies with nearly 4,000 patents
pending. This level of protection is benchmarked against peer
and competitor companies and is considered sufficient to protect
core, proprietary differentiating technology which is developed by
the Company. Despite these efforts to protect its IP rights, any of
the Company’s direct or indirect IP rights could be challenged,
invalidated or circumvented. Further, the laws of certain countries
do not protect the Company’s proprietary rights to the same extent
as the laws in Europe and the US. Therefore, in certain jurisdictions
the Company may be unable to protect its proprietary technology
adequately against unauthorised third-party copying or use, which
could adversely affect its competitive position. The Company may
also face lack of certainty with respect to intellectual property
rights for existing or new research and development programmes
and established or potential partnerships with private or publicorganisations, academic institutions and research councils,
charities and government departments, where the relevant
intellectual property frameworks or user-rights/ownershipgoverning those relationships is dependent on the UK’s status
as a member state of the European Union.
In the event the Company is unable to adequately procure andprotect critical IP it could potentially not implement its businessstrategy.
The Company has been accused of infringement on occasion
and could have additional claims asserted against it in the future.
These claims could harm its reputation, result in financial penalties
or prevent it from offering certain products or services which may
be subject to such third-party IP rights. Any claims or litigation inthis area, whether the Company ultimately wins or loses, could
be time-consuming and costly, harm the Company’s reputation
or require it to enter into licensing arrangements. The Company
might not be able to enter into these licensing arrangements
on acceptable terms. If a claim of infringement were successful
against it, an injunction might be ordered against the Company,
causing further losses. There are currently no significant claims of
IP infringement pending against the Company. Minor claims andpre-dispute matters commonly settle either without the issuanceof formal legal proceedings or during initial proceedings.

Climate change may have a major impact on both the Company’s
industrial operations and its upstream and downstream value
chain, including aircraft direct operations and the wider airtransport ecosystem along with a strong influence on regulations
and stakeholders expectations. Accordingly, climate-relatedrisks can potentially affect the Company’s business andcompetitiveness, its customers and other actors from the aviationindustry.
The Company categorises its climate-related risks andopportunities according to the Task Force on Climate-related
Financial Disclosures (“TCFD”) recommendations. In particular,risks are sorted into two categories: transition and physical.

Transition risks
Technology: The Company has identified the risk of a reductionin the Company’s business, results of operations and financial
condition if a competitor brings a lower emission product to themarket before it does. Delivering on commitments and potential
future requirements to mitigate climate impacts will requiresignificant technological developments for the commercial aircraft
sector. In the event that a competitor or new market participant
has access to technological developments unavailable to theCompany and is able to place on the market a large passenger
aircraft with significantly lower emissions before the Company,
climate mitigation requirements may temporarily push the market
towards competing products until the Company can develop acompeting alternative, which could lead to a temporary loss ofmarket competitiveness and reduced revenue.
Market: Changes in societal expectations and growing concerns
about climate change may impact market demand for airtransport. In particular, a change in certain passengers’ behaviouror their transition to other transport modes could decrease thedemand for the Company’s current and future generation of
products, causing a loss of revenues.
The development of future products based on the ZEROeconcepts will require significant investments in both products
and supporting infrastructure, which could directly impact theoperating costs of such a product.
The competitiveness of this next generation product will alsostrongly depend, among other factors, on the evolution of
the price of carbon. It is therefore crucial for the Company toaccount at each step of development for market expectations,while staying affordable for its customers and competitive withregards to competitors’ portfolios. The failure to do so could resultin the Company losing market share to competitors, as well asaffecting the Company’s return on investment with regards tofuture commercial aircraft products.
Policy and Legal: Aviation is a complex industry, with longproduct development cycles and where change takes a long time
to be implemented. A rapid evolution of climate-related policies(such as carbon pricing policies and sustainable aviation fuelpolicies) and regulatory frameworks (CO2 standards, sustainablefinance, emissions trading systems, aircraft operation restrictions
among others) could generate fast-changing requirements andcould obstruct new product development pathways. As aviation
is a global industry, policies and regulatory frameworks
implemented at regional level rather than international level, or
evolving at a different speed depending on the region, would

Airbus SE / Report of the Board of Directors 202047

4. Corporate Governance /4.6 Risk Factors

unbalance a competitive level playing field for manufacturers andoperators possibly creating market distortion. This could resultin a loss of competitiveness for the Company.
Reputation: Reputational risks could be divided in several
categories. Firstly, there is a risk that misperceptions about
the Company’s environmental performance is used as a key
decision-making criteria for consumers, investors, or even new
talents. Secondly, there is a risk that the Company’s reputation isdamaged by growing societal concerns about the climate change
impact of aviation or by the lack of transparency on progress
made to address climate-related issues.
As an example, the Company was the first manufacturer todisclose its ambition to bring a zero-emission aircraft to themarket. If the ambition is perceived as unattainable or if theCompany is not able to deliver on its ambition it could result
in reputational damage leading to reduced investment, loss ofrevenues and reduced attractiveness. A similar situation could
occur if the Company’s environmental performance is not on parwith its expressed ambition.

Physical Risks
The foreseen consequences of climate change include harsher
average weather conditions and more frequent extreme weather
events, such as hurricanes, hail storms, heat waves or extreme
cold spells. To cope with degraded operational conditions, costly,
time-consuming and more frequent redesigns may be requiredby the Company to improve its products to meet more stringent
regulation and certification criteria or standards.
The effects of climate change on weather conditions may impact
operating conditions of the Company’s industrial activities(including the activities of its supply chain) with higher occurrence
and severity of, for instance, hurricanes, hail storms or floods. As aconsequence, industrial activities may be disrupted or interrupted
if a part of the Company’s industrial system or its supply chain
is affected or impaired by such events. The Company’s future
installations may require more stringent requirements andplanning to withstand more intense weather events.

Regulatory Risks
The Company’s expenditure associated with environmental,
human rights, health and safety challenges may increase due
to both increased costs of compliance with regulations in thoseareas as well as reputational and litigation risks.
Given the scope of its activities and the industries in which it
operates, the Company is subject to stringent environmental,
human rights, health and safety laws and regulations in numerous
jurisdictions around the world. The Company therefore incurs,and expects to continue to incur, significant capital expenditureand other operating costs to comply with increasingly complex
laws and regulations covering the protection of the naturalenvironment as well as occupational health and safety and humanrights. Health and safety expenditures include investments in
the identification and the prevention, elimination or control ofphysical and psychological risks to people arising from work,
including chemical, biological, mechanical and physical agents.
Risks that could arise from work activities include the possibilityof injury, physical and mental ill-health, damage to equipment,
business interruption and regulatory action. Any reputational risk
and claims against the Company that may result will also need
to be managed and may lead to additional health and safety
expenditure being required. In 2020, the Company introduced
stringent COVID-19 risk management measures in the workplace.
However, Company employees have inevitably faced additional
physical and mental ill-health risks due to the COVID-19 crisis.
The COVID-19 pandemic and associated public health controls,48

Airbus SE / Report of the Board of Directors 2020combined with reduced social contact, has led to health, financial
and social uncertainty for many individuals. Environmental
protection expenditures include costs to prevent, control, eliminate
or reduce emissions to the environment, waste management, thecontent of the Company’s products, and reporting and warning
obligations. Current trends indicate that regulatory pressure on
the international scene to reduce the environmental footprint ofindustry is steadily growing (circular economy and resources
efficiency, energy transition and climate change engagement,
air and water quality improvement). Moreover, new laws andregulations, the imposition of tougher license requirements,
increasingly strict enforcement or new interpretations of existinglaws and regulations may cause the Company to incur increased
capital expenditure and operating costs in the future in relation to
the above, which could have a negative effect on the Company’sbusiness, results of operations and financial condition.
If the Company fails to comply with environmental, human rights,
health and safety laws and regulations, even if caused by factors
beyond its control, that failure may result in the levying of civil or
criminal penalties and fines against it. Regulatory authorities may
require the Company to conduct investigations and undertake
remedial activities, curtail operations or close installations or
facilities temporarily to prevent imminent risks. In the event of anindustrial accident or other serious incident, employees, customers
and other third parties may file claims for ill-health, personal injury,
or damage to property or the environment (including natural
resources). Further, liability under some environmental, humanrights, health and safety laws can be imposed retrospectively, ona joint and several basis, and in relation to contaminated sites,
without any finding of non-compliance or fault. These potential
liabilities may not always be covered by insurance, or may be only
partially covered. The obligation to compensate for such damages
could have a negative effect on the Company’s business, resultsof operations and financial condition.
In addition, the various products manufactured and sold by
the Company must comply with relevant health, safety andenvironmental laws, for example those designed to protect
customers and downstream workers or communities, and those
covering substances and preparations, in the jurisdictions in which
they operate. Although the Company seeks to ensure that its
products meet the highest quality standards, increasingly stringent
and complex laws and regulations, new scientific discoveries,
delivery of defective products or the obligation to notify or provide
regulatory authorities or others with required information (suchas under the European Union Regulation known as “REACH”,
which addresses the production and use of chemical substances)
may force the Company to adapt, redesign, redevelop, recertify
and/or eliminate its products from the market thereby incurring
significant additional costs. Seizures of defective products may
be pronounced, and the Company may incur administrative, civil
or criminal liability. Any problems in this respect may also have asignificant adverse effect on the reputation of the Company andlead to a decline in demand for its products and services.
Despite compliance with all applicable laws and regulations, theCompany’s reputation and the demand for its products may also
be affected by the public perception of environmental and societal
impacts of the Company’s products in operation (such as theemission of greenhouse gases or noise) and of the impacts of
the Company and its supply chain industrial operations on local
communities, on the environment and on air and water quality.
The Company cannot predict at this time, the impact on it as aresult of environmental, human rights, health and safety matters,
and may be adversely affected by them in the manner describedabove. For further information on sustainability-related risks, see“– 6. Non-Financial Information and other Corporate Activities– 6.1 Non-Financial Information”.

5. Financial Performance /5.1 IFRS Consolidated Financial Statements

5. Financial Performance
The Airbus SE IFRS Consolidated Financial Statements are prepared in accordance with International Financial ReportingStandards (“IFRS”).

5.1 IFRS Consolidated Financial Statements
Please refer to the “Airbus SE – IFRS Consolidated Financial Statements” and the “Notes to the IFRS Consolidated Financial
Statements” for the years ended 31 December 2020 and 2019.

IFRS Consolidated Income Statement
Please refer to the “Airbus SE – IFRS Consolidated Income Statements” for the years ended 31 December 2020 and 2019.

Revenue
Revenue decreased to € 49.9 billion (2019: € 70.5 billion), driven by the difficult market environment impacting the commercial aircraftbusiness with 34% fewer deliveries year-on-year. A total of 566 commercial aircraft were delivered (2019: 863 aircraft), comprising
38 A220s, 446 A320 Family, 19 A330s, 59 A350s and four A380s. During the fourth quarter of 2020, a total of 225 commercial aircraft
were delivered including 89 in December. In 2020, Airbus Helicopters delivered 300 units (2019: 332 units) with revenues increasing
by around 4%, benefiting from a favourable product mix and growth in services. Revenues at Airbus Defence and Space decreased
by around 4%, mainly reflecting lower volume as well as the impact of COVID-19 on business phasing, mainly in Space Systems.

EBIT and Financial Result
EBIT Adjusted — an alternative performance measure and key indicator capturing the underlying business margin by excluding
material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts
as well as capital gains/losses from the disposal and acquisition of businesses – totalled € 1,706 million (2019: € 6,946 million).
This mainly reflects the weaker commercial aircraft performance, which was supported by a strong contribution from Airbus
Helicopters and Airbus Defence and Space.
Airbus’ EBIT Adjusted of € 618 million (2019 (restated): € 5,947 million) mainly reflects the reduced commercial aircraft deliveries
and associated lower cost efficiency. It also includes € -1.1 billion in COVID-19 related charges. In January 2021, an update on
production rates was communicated in response to the market environment with rates to remain lower for longer.
Airbus Helicopters’ EBIT Adjusted increased to € 471 million (2019: € 422 million), mainly driven by strong government-related activities
and reliable programme execution. It also includes lower Research & Development (R&D) expenses reflecting the end of the European
Union Aviation Safety Agency (EASA) certification process for the five-bladed H145 and the H160.
EBIT Adjusted at Airbus Defence and Space increased to € 660 million (2019: € 565 million), mainly reflecting cost containment
measures and lower R&D expenses, partly offset by the impact of COVID-19, including on the launcher business.
A total of nine A400M military airlifters were delivered during the year, with Belgium taking delivery of its first of seven aircraftin December. Good progress was made with the aircraft’s capability roadmap, including the flight test campaign for Automatic Low
Level Flight certification.
EBIT (reported) was € -510 million (2019: € 1,339 million), including Adjustments totalling a net € -2,216 million.
These Adjustments comprised:–– € -1,202 million related to the Company-wide restructuring plan;–– € -385 million related to A380 programme cost, of which € -27 million were in Q4;–– € -480 million related to the dollar pre-delivery payment mismatch and balance sheet revaluation, of which € -106 million were in Q4;–– € -149 million of other costs (including compliance), of which € -21 million were in Q4.
The net loss was € -1,133 million (2019 net loss: € -1,362 million). It includes the financial result of € -620 million (2019: € -275 million).
The financial result largely reflects interest results of € -271 million, Repayable Launch Investment remeasurement impact in theother financial result of € -157 million, as well as a net € -149 million related to Dassault Aviation financial instruments. It also includes
the impairment of the OneWeb loan, recognised in Q1 2020.
The reported loss per share was € -1.45 (2019: € -1.75).

Airbus SE / Report of the Board of Directors 2020

49

5. Financial Performance /5.1 IFRS Consolidated Financial Statements

TABLE 1 – EBIT AND REVENUE BY DIVISION
Revenues

EBIT (reported)(1)(In € million)

2020

2019

Change2020

2019 (1)

Airbus34,25054,775(37%)(1,330)1,794-

Airbus Helicopters

6,251

6,007

4%

455

414

+10%

ChangeAirbus Defence and Space

10,446

10,907

(4%)

408

(881)

-

Eliminations(1,035)(1,211)

-

(43)

12

-

Total

49,91270,478

(29%)

(510)

1,339

-

(1) Previous year figures are restated to reflect the adoption of a new segment reporting structure for “Transversal” activities as of 1 January 2020. Activities related to innovationand digital transformation, which were formerly reported in “Transversal”, are now included in the business segment “Airbus” under the new segment structure. “Eliminations”
continue to be reported separately.

IFRS Consolidated Statements of Financial Position
Please refer to the “Airbus SE – IFRS Consolidated Statements of Financial Position” at 31 December 2020 and 2019.

Intangible Assets and Property, Plant and Equipment
Intangible assets decreased by € -392 million to € 16,199 million (2019: € 16,591 million). Intangible assets mainly relate to goodwillof € 12,999 million (2019: € 13,019 million).
The annual impairment tests performed in 2020 led to no impairment charge.
Property, plant and equipment decreased by € -620 million to € 16,674 million (2019: € 17,294 million). Property, plant and equipment
include right-of-use assets for an amount of € 1,804 million as of 31 December 2020 (2019: € 1,543 million).

Investments Accounted for under the Equity Method
Investments accounted for under the equity method decreased by € -48 million to € 1,578 million (2019: € 1,626 million). They mainly
include the equity investments in ArianeGroup, MBDA and ATR GIE.
OTHER INVESTMENTS AND OTHER LONG-TERM FINANCIAL ASSETS
31 December(In € million)

2020

2019

Other investments

2,245

2,516

Other long-term financial assets

1,610

1,937

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

3,855

4,453

Current portion of other long-term financial assets

Total

468

449

4,323

4,902

Other investments mainly comprise the Company’s participations and include the remaining investment in Dassault Aviation (9.90%,
2019: 9.90%) amounting to € 742 million at 31 December 2020 (2019: € 968 million).
Other long-term financial assets and the current portion of other long-term financial assets include other loans in the amountof € 1,841 million as of 31 December 2020 (2019: € 2,036 million), and the sales financing activities in the form of finance leasereceivables and loans from aircraft financing.

Inventories
Inventories of € 30,401 million (2019: € 31,550 million) decreased by € -1,149 million. This is driven by Airbus (€ -746 million), and mainlyreflects a decrease in work in progress in line with the production adaptation plan as well as A380 ramp down, partly offset by anincrease in stored aircraft reflecting customer requests to defer deliveries, as well as other factors related to the ongoing COVID-19
pandemic.

50

Airbus SE / Report of the Board of Directors 2020

5. Financial Performance /5.1 IFRS Consolidated Financial Statements

Provisions
31 December(In € million)

2020

2019

Provisions for pensions

9,980

8,353

Other provisions

10,563

10,561

Total

20,543

18,914

thereof non-current portion

13,99812,542

thereof current portion

6,545

6,372

Provisions for pensions — As of 31 December 2020, the change in actuarial assumptions resulted overall in a total net increasein pension liability of € 1,627 million, principally reflecting the weakening of interest rates in Germany, France, Canada and the UK
partly compensated by the performance of the asset market values, resulting from market volatility related to the ongoing COVID-19
pandemic.
Other provisions increased mainly due to the restructuring provision recorded in 2020 in response to the COVID-19 pandemic,
partly offset by a decrease in provisions for onerous contracts due to the utilisation and net presentation of the A380,
A400M and A220 programme losses against inventories.

Other Financial Assets and Other Financial Liabilities
OTHER FINANCIAL ASSETS
31 December(In € million)

2020

2019

Positive fair values of derivative financial instruments

3,451

996

32

37

Total non-current other financial assets

3,483

1,033

Receivables from related companies

1,158

1,148

Positive fair values of derivative financial instruments

973

444

Others301

468

Total current other financial assets

2,432

2,060

Total

5,915

3,093

OthersOTHER FINANCIAL LIABILITIES
31 December(In € million)

2020

2019

Liabilities for derivative financial instruments

1,834

2,434

European governments’ refundable advances

3,712

3,725

111

1,339

5,657

7,498

Liabilities for derivative financial instruments

983

1,560

European governments’ refundable advances

200

552

Liabilities to related companies

130

159

OthersTotal non-current other financial liabilities

Others456

376

Total current other financial liabilities

1,769

2,647

Total

7,426

10,145The total net fair value of derivative financial instruments increased by € +4,161 million to € +1,607 million (2019: € -2,554 million)
as a result of the weakened US dollar versus the euro associated with the mark to market valuation of the hedge portfolio.
Overall, the European governments’ refundable advances decreased by € -365 million to € 3,912 million (2019: € 4,277 million), mainly
due to payments made on the A380 programme for an amount of € -505 million offset by the remeasurement described above.

Airbus SE / Report of the Board of Directors 2020

51

5. Financial Performance /5.1 IFRS Consolidated Financial Statements

Other Assets and Other Liabilities
OTHER ASSETS
31 December
2020

2019

Cost to fulfil a contract

282

351

Prepaid expenses

76

86(In € million)

Others125

85

Total non-current other assets

483

522

Value added tax claims

1,025

1,252

Cost to fulfil a contract

557

626

Prepaid expenses

191

147

Others443

398

Total current other assets

2,216

2,423

Total

2,699

2,945

OTHER LIABILITIES
31 December(In € million)

2020

2019

Others436

384

Total non-current other liabilities

436

384

Tax liabilities (excluding income tax)

749

614

Others

2,411

6,203

Total current other liabilities

3,160

6,817

Total

3,596

7,201

Total Equity
The Company’s shares are exclusively ordinary shares with a par value of € 1.00. The following table shows the development of
the number of shares issued and fully paid:(In number of shares)

Issued at 1 January
Issued for ESOP

2020

2019

783,173,115

776,367,881

976,155

1,784,292

Issued for convertible bond

05,020,942

Issued at 31 December

784,149,270

783,173,115

Treasury shares

Outstanding at 31 December(432,875)(862,610)

783,716,395

782,310,505

Holders of ordinary shares are entitled to dividends and to one vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including purchased treasury shares) amounts to € 6,445 million(2019: € 5,975 million) representing an increase of € +470 million. This is mainly due to an increase in other comprehensive income,principally related to the mark to market revaluation of the hedge portfolio of € +2,783 million offset by a change in actuarial gains
and losses of € -1,268 million, further compensated by a net loss for the period of € -1,133 million.
The non-controlling interests (“NCI”) from non-wholly owned subsidiaries decreased to € 11 million as of 31 December 2020(2019: € 15 million). These NCI do not have a material interest in the Company’s activities and cash flows.

52

Airbus SE / Report of the Board of Directors 2020

5. Financial Performance /5.1 IFRS Consolidated Financial Statements

Net Cash
The net cash position provides financial flexibility to fund the Company’s operations, to react to business needs and risk profile andto return capital to the shareholders. This flexibility has been essential in managing the Company’s operations during the COVID-19
pandemic.
31 December(In € million)

2020

2019

Cash and cash equivalents

14,439

9,314

Current securities

1,618

2,302

Non-current securities

5,350

11,066Gross cash position

21,407

22,682

Short-term financing liabilities(3,013)(1,959)Long-term financing liabilities(14,082)(8,189)4,312

12,534Total

The net cash position on 31 December 2020 amounted to € 4,312 million (2019: € 12,534 million), with a gross cash position of€ 21,407 million (2019: € 22,682 million).

Cash and Cash Equivalents
Cash and cash equivalents are composed of the following elements:
31 December
2020

2019

Bank account and petty cash

4,173

1,649

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

9,654

7,014

512

652

(In € million)

Short-term securities (at fair value through OCI)
OthersTotal cash and cash equivalents

100

(1)

14,4399,314

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

Securities
The Company’s securities portfolio amounts to € 6,968 million and € 13,368 million as of 31 December 2020 and 2019, respectively.
The security portfolio contains a non-current portion of € 5,350 million (2019: € 11,066 million), and a current portion of € 1,618 million(2019: € 2,302 million).

Financing Liabilities
31 December(In € million)

2020

2019

Bonds and commercial papers

12,032

6,491

Liabilities to financial institutions

418

244

Loans

94

156

1,538

1,298

14,0828,189

Lease liabilities
Total long term financing liabilities
Bonds and commercial papers

1,075

0

Liabilities to financial institutions

111

106

Loans

94

127

Lease liabilities

260

262

Others (1)

1,473

1,464

Total short-term financing liabilities

3,013

1,959

Total

17,095

10,148(1) Included in “others” are financing liabilities to joint ventures.

Airbus SE / Report of the Board of Directors 2020

53

5. Financial Performance /5.2 Information on Airbus SE auditors

Long-term financing liabilities mainly comprising of bonds and lease liabilities, increased by € +5,893 million to € 14,082 million(2019: € 8,189 million), mainly due to the issuance of two bonds for a total of € 6 billion. The first bond was split into a 5 year‑maturity trancheof € 750 million with a coupon of 1.625%, an 8 year-maturity tranche of € 750 million with a coupon of 2.00% and a 12 year‑maturity
tranche of € 1 billion with a coupon of 2.375%. The second bond was split into a 6 year-maturity tranche of € 1.25 billion with a couponof 1.375%, a ten year-maturity tranche of € 1.25 billion with a coupon of 1.625% and a 20 year-maturity tranche of € 1 billion witha coupon of 2.375%.
Short-term financing liabilities increased by € +1,054 million to € 3,013 million (2019: € 1,959 million). The increase in short-term
financing liabilities is mainly related to the reclassification of € 1 billion of exchangeable bonds from long-term to short-term due
to maturity in June 2021.

Free Cash Flow
Free Cash Flow before M&A and customer financing amounted to € -6,935 million (2019: € 3,509 million), including the paymentof the compliance-related penalties of € -3.6 billion in Q1 2020. The Q4 2020 Free Cash Flow before M&A and customer financing of€ 4.9 billion reflects the solid level of aircraft deliveries in the quarter, the good performance from Helicopters and Defence and Space,
as well as a strong focus on working capital management.

Order Intake and Order Book
Net commercial aircraft orders totalled 268 (2019: 768 aircraft) with the order backlog comprising 7,184 commercial aircraft asof 31 December 2020. Airbus Helicopters booked 268 net orders (2019: 310 units), including 31 NH90s for the German Bundeswehr
in Q4 and 11 H160s. Airbus Defence and Space’s order intake by value increased 39% year-on-year to € 11.9 billion, a book-to-bill
above one, mainly driven by major contract wins in Military Aircraft. This included a contract signed in November to deliver 38 new
Eurofighters for the German Air Force.
Order intake by value decreased to € 33.3 billion (2019: € 81.2 billion) with the order book valued at € 373 billion on 31 December
2020 (year-end 2019: € 471 billion). The decrease in the value of the commercial aircraft backlog reflects the higher number of deliveries
compared to order intake, the weakening of the US dollar and an assessment of the backlog’s recoverability.
TABLE 2 – ORDER INTAKE AND ORDER BOOK BY DIVISION
Order Intake (net)

2020
Airbus (in units)
Airbus (in € million)
Airbus Helicopters (in units)

Order Book

2019

Change2020

2019

Change

268

768

-65%

7,184

7,482

-4%

16,08965,769-76%

324,675

424,082

-23%

268

310

-14%

663

695

-5%

Airbus Helicopters (in € million)

5,519

7,179

-23%

15,782

16,627-5%

Airbus Defence and Space (in € million)

11,862

8,520

+39%

33,50532,263+4%

5.2 Information on Airbus SE auditors
Date of first appointment

Expiration of current term of office (1)28 April 201614 April 2021

Ernst & Young Accountants LLP
Boompjes 258
3011 XZ Rotterdam
Postbus 488
3000 AL Rotterdam
The Netherlands
Represented by A.A. van Eimeren(1) A resolution will be submitted to the Annual General Meeting of Shareholders in 2021, in order to appoint Ernst & Young Accountants LLP as the Company’s auditors for the 2020
financial year.

Ernst & Young Accountants LLP has a licence from the AFM to perform statutory audits for Public Interest Entities andits representative is member of the NBA (Koninklijke Nederlandse Beroepsorganisatie van Accountants – the Royal Netherlands
Institute of Chartered Accountants). The NBA is the professional body for accountants in the Netherlands.

54

Airbus SE / Report of the Board of Directors 2020

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

6. Non-Financial Informationand other Corporate
Activities
6.1 Non-Financial Information
6.1.1 Airbus’s Approachto Sustainability
The Company is now using the term “sustainability” to fully
encompass both the notions of responsibility and sustainability,
not only to be in line with current business practices but also
to reflect a more comprehensive and integrated approachto sustainability. It understands that acting responsibly is aprerequisite, essential to ensuring sustainability, now at the heartof the Company’s new purpose and business strategy. For a
description of the Company’s business model and strategy, see“– 1: General Overview” and “– 7: Strategy”.
Sustainability at the Company focuses on the long term successof the Company while ensuring that society can meet its present
needs without compromising the ability of future generations todo the same. By adopting the 17 United Nations Sustainable
Development Goals (“SDGs”), the Company embraces a shared
blueprint and common reference as to what will guarantee
a sustainable future. It also offers a framework to align its
sustainability contributions.
In 2019, with the impulse of the Next Chapter transformation, theCompany took on the task of rethinking its company purpose andin identifying its most essential contributions to society. With its
new purpose statement “We pioneer sustainable aerospace
for a safe and united world”, the Company defines why it
exists: to lead the way in the decarbonisation of our industry
and sustainable global travel, to unite and safeguard the citizensof the world, and continually expand human knowledge of ouruniverse, from critical events on earth to the exploration of space.
The Company’s purpose is brought to life via its strategy which
defines what it does, plans and prioritises. The “what it does”
is reflected first and foremost in the product and services

portfolio offered to its customers. Its aircraft are essential
to uniting families, business leaders, medical professionals,
students and diplomats worldwide. In 2019, the aviation
sector helped unite 4.5 billion passengers (1), many of whichused Airbus aircraft. In parallel, its helicopters are critical toensuring medical emergency missions, firefighting missions,search and rescue missions and the performance of geologicaland wildlife surveys amongst others. Its defence and space
portfolio assists government authorities, emergency service
providers and healthcare providers in safeguarding citizens
worldwide by providing communication, collaboration andintelligence knowledge solutions. Solutions such as Airbus
Earth monitoring systems are critical to better understanding
the impact of climate change and to monitoring deforestation,
ensuring positive contributions to SDG 13, “Climate Action” andSDG 15, “Life on Land”.
The COVID-19 crisis has also revealed aviation’s significant
value under such critical circumstances, by transporting such
goods as masks and ventilators in record time, making a key
contribution to SDG 3, “Good Health and Wellbeing”. In addition,
aircraft helped stranded families return home, thanks to 39,200
repatriation flights of 5.4 million passengers between March and
September 2020. As many faced travel restrictions, this crisis
has also raised awareness of the psychological benefits of travel
and the physical connection for which the Company and theindustry play an essential role.
Conscious of the valuable societal needs the Company cansatisfy via its range of products and services, Airbus wants tolead a sustainable industry transformation.
Furthermore, the Company’s contribution to society and theSDGs goes well beyond what it offers directly through its
products and services.

(1) ATAG Aviation Benefits Beyond Borders Global Fact Sheet – September 2020.

Airbus SE / Report of the Board of Directors 2020

55

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

For example, it also contributes significantly to SDG 8 “Decent
Work and Economic Growth”. According to the 2019 ATAG
Benefits Beyond Borders fact sheet, prior to the COVID-19
crisis, the aviation sector supported 87.7 million jobs worldwide,
11.3 million of which were direct jobs in the industry, known

Economic
benefits

for its high-value added professions. Another 18.1 million jobs
were supported through the aviation industry supply chain and13.5 million through induced benefits of industry and employee
spending. Finally another 44.8 million jobs supported in the
tourism industry.

87.7 million$3.5 trillion

Jobs supported by aviation worldwide

Global contribution to GDP, 2018
(4.1% of world economic activity)

11.3 million direct jobs in the industry:
648,000 at airport operators
5.5 million in other on-airport jobs
3.6 million at airlines
1.3 million in civil aerospace
237,000 at air navigation service
providers

4.3x
Aviation jobs are, on average,
4.3 times more productive than other jobs

35%
18.1 million jobs supported throughthe aviation industry supply chain
13.5 million jobs through induced benefitsof industry and employee spending
44.8 million jobs supported in the tourism
industry

Worldwide trade by value carriedby air transport, 2018 ($6.5 trillion).
By volume: 0.5%

17th
If aviation were a country, it would rank
17th in size by GDP

Reference: 2020 ATAG Benefits Beyond Borders fact sheet.

The COVID-19 crisis has also put the important economic
contribution of aviation in the spotlight, as travel restrictions
and health preoccupations slowed global traffic dramatically.
According to the September 2019 ATAG COVID 19 Analysis Fact
Sheet, 46 million jobs and US$ 1.8 trillion worth of economic
activity, normally supported by aviation, were at risk.
Despite these exceptional circumstances, Airbus continues toplay an important role in welcoming thousands of apprentices,
working students, interns and young graduates thanks to its
extensive early career programmes, making it a major contributor
to SDG 4, “Quality Education”. In Germany alone, there wereover 2,000 apprentices and dual students employed as of
31 December 2020 with 640 of them being new entries over
the year.
Airbus is conscious of the value it brings to society, and it
wants to bring this value in a sustainable way, ensuring it cancontinue to unite and safeguard while minimising its socialand environmental impact. This remains a challenge that theCompany is taking seriously as demonstrated by its “ZEROe”
concepts, Airbus is targeting the world’s first zero-emissioncommercial aircraft to enter service by 2035. Pioneering
sustainable aerospace can offer the Company a competitive
advantage, while improving resilience, and ensuring it maintains
its license to operate. Conversely, lack of progress could
represent a risk to the Company. Beyond the influence of its
purpose, this explains why sustainability is an essential part ofthe corporate strategy.

56

Airbus SE / Report of the Board of Directors 2020

In 2020, to increase its focus on sustainability efforts, theCompany revamped its sustainability strategic framework aroundthe following four priority commitments:–– Lead the journey towards clean aerospace–– Respect human rights and foster inclusion–– Build its business on the foundation of safety and quality,and–– Exemplify business integrity6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The process of constructing and selecting these four commitments
was a multi-functional effort, led by the Sustainability &Environment and Strategy teams, with the support of Corporate
Affairs and of members of the Sustainability Network (formerly
known as the “R&S Network”) regrouping representatives acrossnumerous functions of the Company.
The objective is to set clear ambitions across each commitment
with agreed key performance indicators (“KPIs”) and targets
enabling the Company to monitor progress towards theseambitions. This process has begun in 2020 and will continue
to mature over 2021.
Several sources were essential in deciding on the fourcommitments, including the 2019 materiality assessment, athorough benchmark, an analysis of market and regulatory
trends, an evaluation of environmental, social and governance(“ESG”) risks in the Company’s risk report, a gap analysis andthe consideration of the Company’s values.

Conscious that a business cannot be sustainable without creating
shared long-term value for all of its stakeholders, dialogue is an
important part of the Company’s approach to sustainability.
The responsibility for stakeholder engagement, as a generalrule, is decentralised and employees are encouraged to initiate,
develop and maintain relationships and dialogue with theirrespective stakeholders. However, at a more strategic level the2019 materiality assessment was a critical exercise in capturing
the voice of 12 of its most important stakeholder groups, helping
the Company identify which ESG issues were most material tothem, and integrating this into its strategy. These key stakeholder
groups included customers, suppliers, partners, NGOs, investors,
employees, authorities, governments, industry associations, MRO
providers, airports and the community at large.
The materiality viewpoint of stakeholders was compared with thatof the Company, in addition to an analysis of which ESG issues it
had, or could have, the most impact on. This led to the following
three-dimensional materiality matrix, fundamental in establishing
the Company’s four commitments.

Materiality Matrix 2020

Technology & Innovation
Environmentally
responsible products

HIGHEST

Product quality& Responsibility
Security
Health & Safety

HIGHER

Environmental managementof operations
Business culture& LeadershipResponsible employer

Economic

Stakeholder engagement
HIGH

INCREASING MATERIALITY TO STAKEHOLDERS

Materiality Matrix

Community impact
Responsible
supply chains
HIGH

HIGHERHIGHEST

INCREASING IMPACT ON AIRBUS
Bubble size : Impact OF Airbus
Environment

Safety & Quality

Human rights

Business integrity

Other

Source: Datamaran.

Governance and Organisation
2020 was also a year when the Company strengthened its
governance around sustainability. The former Ethics & Compliance
Committee of the Board of Directors was expanded to include
sustainability as a whole, with the first meeting of the ECSC
taking place in October 2020. For further information about the
ECSC, see “– Corporate Governance – 4.1.3 Board Committees”.
The ECSC is responsible for assisting the Board of Directors tooversee the Company’s:–– culture and commitment to ethical business, integrity andsustainability;–– Ethics & Compliance programme, organisation and framework
for the effective governance of ethics and compliance, including
all associated internal policies, procedures and controls; and–– sustainability strategy and effective governance to ensurethat sustainability-related topics are taken into account in the
Company’s strategy and objectives.
Under the Board Rules, the Board of Directors delegates the
day-to-day management of the Company to the CEO, who,
supported by the Executive Committee makes decisions
with respect to the management of the Company, including
sustainability. The Executive Committee has the responsibility
to provide top level expectations and direction while overseeing
and validating the sustainability strategy. This entails validating
sustainability targets including those integrated into the Top
Company Objectives.

Airbus SE / Report of the Board of Directors 2020

57

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The Executive Committee is supported by several committees or boards linked to our four sustainability commitments.
The Environment Executive Steering Committee, the Inclusion & Diversity Board as well as the Product Safety Board.
Other sustainability topics are brought directly to the attention of the Executive Committee without first being discussed in
specific committees or boards.

Board of Directors

Ethics, Compliance & Sustainability Committee

Executive Committee

Environment
Executive
Steering
Committee

Inclusion & Diversity
Advisory
Board

Product Safety
Board

On the organisational front, an important step came inJanuary 2020 when the former Responsibility & Sustainability
and Environmental Affairs departments merged to create one
new integrated department, named Sustainability & Environment.
The aim is to leverage the expertise of the former Environmental
Affairs team in regulatory monitoring and management systems
to accelerate the overall sustainability ambitions of the Company.
Within this new department, a dedicated “Develop & Engage”
team was created to help develop a greater coordination andadvancement of sustainability policies, objectives, and roadmaps
across countries, Divisions, affiliates and regions. It also aims todevelop global plans for employee engagement in sustainability
and for employee involvement in local communities.
The Company also believes the integration of sustainability criteria
in its reward mechanisms is an important enabler for accelerating
its sustainability ambitions. In 2020, the Company integrated asustainability component into the Common Collective Componentof the CEO’s Variable Remuneration, accounting for 20% of thepayout. This principle also applied to the other members of the
Executive Committee who do not serve on the Board of Directors,
and to a large extent to all Executives employed at the Company.
As for employees below senior manager level, sustainability
criteria has been integrated as part of the operational targets
impacting the payout of success sharing schemes which are
implemented in the Company in more than 30 countries. For moredetails regarding the Company’s remuneration schemes, see“– Corporate Governance – 4.4 Remuneration Report”.

Reporting
In regards to overall sustainability reporting the Company has
chosen to report against the Global Reporting Initiative (“GRI”)
standards. Not only are these standards one of the mostinternationally used and recognised reporting standards today,
but their intent is to answer the needs of a variety of stakeholder
groups, which is also aligned with the Company’s focus on
stakeholder engagement and dialogue.
Furthermore, as a member of the UN Global Compact since2003, the Company submits annually its Communication on
Progress and has reached “Advanced Level”.

You will find these issues covered within the following sectionsof this chapter:–– Lead the journey towards clean aerospace:–– 6.1.2 Environment (“environmentally responsible products”
and “environmental management of operations” in thematrix);–– Build its business on the foundation of safety and quality (1):–– 6.1.3(a) Aviation and Product Safety (“product responsibility”
in the matrix),–– 6.1.3(b) Health and Safety (same in the matrix);–– Respect human rights and foster inclusion:–– 6.1.4(a) Human Rights (“responsible employer” in the matrix),–– 6.1.4(b) Inclusion and Diversity (“responsible employer”
in the matrix),–– 6.1.4(c) Labour Relations (“responsible employer” inthe matrix),–– 6.1.4(d) Workforce (“responsible employer” in the matrix);–– 6.1.5 Exemplify business integrity: Ethical business practices(“business culture and leadership” in the matrix);–– 6.1.6 Responsible supply chain (“responsible supply chains”
in the matrix); and–– 6.1.7 Community engagement (“community impact” inthe matrix).

Airbus’ Way Forward: Vigilance Plan
The Company is determined to conduct its business responsibly
and with integrity. The Company is convinced that promoting
responsible business conduct within its value chain is key tosustainable growth.
The Company is determined to drive its four sustainability
commitments across its value chain. They include commitments
linked to human rights, health and safety and the environment.
In 2020, even greater focus has been placed on Airbus’ supply
chain. With the launch of a dedicated Sustainable Supply Chain
Roadmap, the Company intends to accelerate improvements
upstream. For the Company’s Vigilance Plan for its supply chain,see “– 6.1.6 Responsible Supply Chain”, which shall be deemed
to be incorporated by reference and form part of this plan.

(1) See chapter 6.2 for Research & Technology (“technology and innovation” in the matrix).

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Airbus SE / Report of the Board of Directors 2020

Human Rights, Health & Safety, Ethics & Compliance:
direct cascading of topics to the EC

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

As far as its own operations are concerned, the Company has
adopted internal policies and management tools to perform theassessment, monitoring, mitigation and reporting of risk andcompliance allegations, which are embedded into the Company’s
culture and processes. At the Company, heads of programmes
and functions, as well as managing directors of affiliates,
supported by respective internal specialists, shall ensure proper
deployment of the Company’s policies, management of ERM
in their fields or perimeters, as well as duly reporting issues
to top management. The Company’s approach is based on
its existing strengths, namely a strong management process
already established and adopted by employees, empowermentof specialists and an industry approach whenever possible.
With regard to risk management, the Company performed anin-depth review of its ERM system in 2017 in order to identify
potential missing risks related to human rights and fundamental
freedoms, health and safety and the environment. Since then,the ERM system is continuously evolving to take into accountthe most significant risks which can be generated as part of theCompany’s operations. During 2020, these risks and related
response plans were consolidated and were reported to theCompany’s top management on a regular basis. Sustainability
risks are structured around four topics reflecting the Company’s
four sustainability commitments: environment, human rights,
safety, and business integrity. To increase the consideration ofsustainability subjects across the Company, the ERM Center ofCompetence 2020 Confirmation Letter required all organisations
to assess if human rights, health & safety and environment risks
are identified, assessed, and response plans are in place, andeventually define improvement actions to address these typesof risks. For further information on ERM, see “– Corporate
Govenance – 4.5 Enterprise Risk Management System”.
For further information on the Company’s risks, see “– Corporate
Governance – 4.6 Risk Factors”.
To support our commitment to and promotion of a “SpeakUp”
culture, the Company has an “OpenLine” to provide employees
and third parties with an avenue for raising concerns in aconfidential way. For further information on the OpenLine, see“– 6.1.5 Exemplify Business Integrity”.
To continuously drive improvement, the Company offers
employees over 400 training opportunities, online and in-person,
linked to human rights, diversity, health and safety, ethics &compliance, and environmental matters. It continues to deploy
the Directors’ training programme which is dedicated to riskexposed populations, such as Managing Directors, Heads ofFinance and Board Members of affiliates.
The Airbus Leadership University took the lead to embedsustainability commitments into the development solutions it
offers, in order to ensure the Company’s managers are trained andequipped to instil the right behaviours, foster cultural change andencourage the search for innovative solutions to answer societal
challenges. For example, the Company offers its executives aday-long “Responsible and Ethical Leadership” MasterClass.
In addition, in 2020, the Company launched a learning journey
for all its leaders with team management responsibilities which
includes, as one of its key pillars, the promotion of sustainablebusiness practices.
The foundation for integrity at Airbus is the Code of Conduct,
which is intended to guide daily behaviour and help employees
resolve the most common ethical and compliance issues that they
may encounter. The Code of Conduct applies to all employees,
officers and directors of the Company as well as entities that
the Company controls. Third-party stakeholders with whom theCompany engages are also expected to adhere to the Code of
Conduct in the course of performing work on Airbus’ behalf.

All affiliates of the Company (affiliates where the Company owns
more than one half of the voting rights, or is able to appoint ordischarge more than one half of the members of the Board)
with operational activities are expected to deploy similar internal
policies applying the Company’s directives.
A corporate directive assists the Company affiliates in effectively
fulfilling their responsibilities while assuring the Company’s
ongoing commitment to high standards of corporate governance.
In 2020, the Company, working closely with its two Divisions,approved an update of the company-wide single directive on
corporate governance for the Company’s affiliates, which defines
rules, processes and procedures applicable to the Company’s
affiliates and their respective boards, directors and officers.
The Company leveraged this in-depth work to integrate enhanced
requirements on labour and human rights, environment, healthand safety and procurement matters into the new directive on
the basis of Company related internal policies including:–– International Framework Agreement;–– Agreement on the European Works Council;–– Supplier Code of Conduct;–– Health & Safety Policy;–– the Company’s Code of Conduct;–– Environmental Policy;–– the Company’s Anti-corruption Policy and related Directives.
Since September 2018, this directive has become a reference
for all affiliates from all Divisions, and the Company is working
on a regular yearly update to constantly improve it. Based on the
updated directive, a newly harmonised questionnaire was sent toall controlled affiliates in 2020 to self-assess their internal controls,
including how they relate to the environment, health & safety,
human resources and procurement compliance requirements.
Regarding the above activities, controlled affiliates were asked
to confirm that all relevant Company policies were accessible totheir employees and duly communicated to them. If that is not
the case, controlled affiliates shall take appropriate actions toremediate the gaps.
To verify that the answers provided to the questionnaire are in linewith the Company’s expectations, so-called “Fit” checks started
to be performed in 2018 on some Finance, Compliance andGovernance key controls for controlled affiliates of the Company
and its two Divisions. From 20 Fit checks performed in 2018, theCompany increased to 70 in 2019 and reached 79 Fit checks
in 2020 despite the COVID-19 crisis. 85 Fit checks are targetedin 2021.
Since 2019, affiliates are also asked to regularly evaluate risks
via the Company’s ERM system, as well as to regularly monitor
them as part of their risk assessment process. The Company
endeavours to ensure that the procedures to assess, investigate
and manage allegations are well aligned throughout the Company.
In 2020, the internal controls process has been reinforced andthe coverage extended to jointly controlled and non- controlled
affiliates to mainly ensure the proper application of relevant
compliance and sustainability policies.
Each affiliate with operational activities has in place a Boardof Directors and/or a shareholders’ meeting where strategic
decisions are made. Each affiliate has an Airbus supervisor
who is a member or Chairman of the Board of Directors who
ensures that all the Company’s requirements are consideredby the affiliate’s management. At least once a year the agendaof the Board of Directors will include an update on ethics andcompliance matters (including training, awareness and any otherrelevant issues).

Airbus SE / Report of the Board of Directors 2020

59

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

For its principal and operational minority joint ventures, theCompany will work with the joint-venture partners to ensure
the proper application of relevant compliance and sustainability
policies.
For further information on the Company’s approach to theenvironment, see “– 6.1.2 Environment”. For further informationon the Company’s approach to human rights and health andsafety, see 6.1.4 and 6.1.3 respectively.

6.1.2 Lead the Journey Towards
Clean Aerospace
Environment
I. Introduction
In line with the Company’s purpose “pioneering sustainableaerospace for a safe and united world” and to drive thetransition of the air transport system towards climate neutrality,
our foremost ambition as an aircraft manufacturer is to bring
the first zero emission (also referred to as “ZEROe”) commercial
aircraft to the market by the mid of the next decade and toplay a leading role in the decarbonisation of the aviation sector.
The Company is investing major resources into examining andreducing the impact of its products in operation together with allactors within the aviation sector. As a supporter of the Task Forceon Climate-related Financial Disclosures (“TCFD”), the Company
does not only rigorously track and measure its own impact in its
sites, products and services, but it also works in cooperation with
its worldwide supply chain to drive more effective environmental
management, decarbonise its industry and foster circularity by
optimising resource utilisation. To help the Company reach its
vision it places innovation at the core of this effort by investing inresearch, new technologies and sustainable solutions.

II. Governance
Environmental Policy
The Company has put sustainability at the heart of its
company strategy and governance, making it a clear priority.
We take a holistic approach to measuring and acting upon ourenvironmental performance by assessing the environmental
impact of our internal operations as well as providing capabilities
to our customers to reduce the impact of the products inoperation. This also means introducing a lifecycle perspective
and mitigating the risks and impacts at all stages along thelifecycle, from the procurement of raw materials, through thedesign and manufacturing of our products, to their in-service
life until their retirement.
This is driven through the Company’s environmental policy and
it is illustrated by four key ambitions:–– lead the decarbonisation of the aerospace sector aiming tobring the first zero emission commercial aircraft to market
by 2035;–– reduce our industrial environmental footprint at sites worldwide
and throughout our supply chain;–– develop a more circular model, leveraging ecodesign anddigitalisation to optimise material utilisation and reduce useof critical resources;–– enhance our current product and services portfolio contributing
positively to climate change mitigation and adaptation.
The industry faces a variety of environmental challenges, including
climate change, and the Company invests and cooperates
with stakeholders across the value-chain in researching andimplementing innovative ways to meet them.

60

Airbus SE / Report of the Board of Directors 2020

The Company recognises its role in contributing to reduce theglobal environmental footprint of the sector and the importance ofaligning and respecting the commitments of the Paris Agreement.
Climate change may also affect the environmental conditions inwhich the Company’s manufacturing activities and products areoperated. Another area of attention is the elimination of regulated
substances posing a risk to human health or the environment.
The Company is continually seeking technically-feasible
sustainable solutions to reduce the environmental impacts of
its products and operations, in cooperation with its suppliers
and industrial stakeholders.

Organisation and Responsibilities
Two main management structures are relevant for the governancein sustainability matters and climate change: the Board of
Directors and the Executive Committee.
As mentioned above, the Board of Directors is supported by
its recently expanded committee, the ECSC. In practical terms,
the ECSC as a committee of the supervisory board oversees
strategic decision-making and the execution of the approved
sustainability strategy, including areas such as innovation andenvironmental & climate action.
Nonetheless, until today, carbon reduction initiatives andsustainability projects have been regularly discussed at Boardof Directors level under the review of the “General report” whichis part of the first items on the agenda of each Board meeting.
To support the Executive Committee in environmental matters,
especially climate-related, an Environment Executive Steering
Committee (“EnC”) was established. The EnC gathers somemembers of the Executive Committee and senior managers
responsible for environmental topics. It meets monthly toreview the progress and take decisions on all matters related
to the environmental strategy. The EnC reviews climate change
related topics, including the progress on greenhouse gas (“GHG”)
emissions reduction objectives, the decarbonisation strategy
and climate related risks.
Environmental operations are led by the Sustainability &Environment department described above, whose role is toguide the business in environmental matters and to set the policy
and deploy, drive and improve the Environmental Management
System (“EMS”) throughout the Company.
The Company’s EMS is based on ISO 14001:2015. Airbus was
the first aircraft manufacturer to be ISO 14001 certified, andcontinues to show its commitment by having been recertified
to ISO 14001: 2015 in November 2019, and confirmed by acertification surveillance audit in 2020. Airbus also monitors
environmental regulatory developments to understand, evaluate
and prepare for legal and regulatory evolutions applicable to its
activities and products.

Disclosure of Environmental Indicators
The Company actively monitors its environmental data throughout
the organisation in order to measure the environmental impact
of its site operations, track its performance and communicate
information on environmental matters to internal and external
stakeholders.
Since 2010, the Company has published environmental data
verified by external auditors. Below is a selection of externallyreviewed environmental indicators.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

ANNUAL REPORTING OF PERFORMANCE INDICATORS TABLE
Environmental
performance

Energy

GRI

EN3

EN16

Air emissions

EN17

EN20
EN21

Water

KPI

Unit

2020

2019

Total energy consumption (excluded electricity generated
by CHP on site for own use) ✔

GWh

3,482

4,108

Energy consumption from stationary sources ✔

GWh

1,270

1,391

Energy consumption from mobile sources ✔

GWh

794

1,113

Total electricity consumption, heat & steam consumption
excluding CHP for own use ✔

GWh

1,417

1,604

Of which purchased electricity from renewable sources (REC)

GWh

226

142

Generated electricity from CHP on-site for own use ✔

GWh

179

188

Total Scope 1 + Scope 2 CO2 emissions ✔

ktons CO2e

783

954

Total direct CO2 emissions (Scope 1) ✔

ktons CO2e

470

578

Total indirect CO2 emissions (Scope 2) ✔

ktons CO2e

313

376

Indirect CO2 emissions Business Travel (Scope 3) ✔

ktons CO2e

22

109

Indirect CO2 emissions Oversize Transportation (1) (Scope 3)

ktons CO2e

128

169

Indirect CO2 emissions Use of Sold Product (Scope 3) ✔

ktons CO2e443,252

736,003

Of which indirect emissions from the production of fuel ✔

ktons CO2e

79,313

131,696

tons

1,112

1,474

Total VOC emissions (2) ✔
Total SOx emissions

tons

14

15

Total NOx emissions

tons

238

282

EN8

Total water consumption ✔

m3

3,332,617

4,081,726

EN22

Total water discharge

m3

3,090,932

3,754,017

tons

74,87999,361

EN23

Material recovery ratep

%

51.0

53,9

Energy recovery rate

%

20,7

21,2

Unit

62/79

62/80

%

96

94

Total waste production, excluding exceptional waste ✔
Waste

EMS certification

Number of sites with ISO 14001 / EMAS certification (3)vs total number of covered by environmental reporting
Workforce effectively covered by reporting over workforce
subject to reporting according to the environmental guidelines

Geographical scope
Reported data covers 79 sites. Airbus environmental reporting guidelines include sites worldwide with a workforce on-site higher or equal to 50 employees. Note that only 100%
consolidated entities are taken into account.

--

Scope of metrics
2019 baseline has been recalculated to integrate changes in accounting methodology: Gas emission factor for France according to Base Carbone 2015 for 2015 to 2019 data,
Oversize transport emission factors update, Mobile FAL electricity & gas perimeter update, Stationary energy consumptions actuals update, Renewable Energy Certificates
actuals update.

--✔: 2020 data audited by EY®. 2020 data covers 94,7% of active workforce.
(1) Oversize emissions cover transport of large and non standards shipments. Values cover aircraft commercial activities and are estimated.
(2) 2020 VOC emissions data is estimated. 2020 actuals will be consolidated during March 2021.
(3) Number of sites covered by the environmental reporting which are certified ISO 14001.

As part of its transparency policy, the Company provides climate change related data and information to the CDP annually, providing
its investors and other interested parties with the insight they need. In 2020, the Company has been awarded the A- score, up from
B in 2019.

III. Risk Management
Environmental risk and opportunities are managed following the Company’s ERM system and requirements defined within the
ISO14001:2015 certified EMS. Identification of specific environmental risks and opportunities is defined by internal guidance andnotably highlights the Life Cycle Perspective approach to be adopted and the inputs to be considered: environmental aspects andimpacts, compliance obligations and other issues and requirements including stakeholders’ expectations or environmental objectives.
Risks and opportunities are reported quarterly to the Executive Committee of each Division and top risks, including climate relatedrisks, are consolidated at Company level to be brought to the attention of the Board of Directors and reviewed semi-annually.

1. Climate-Related Risks
Climate-related risks are described in “– 4.6 Risk Factors – 4.6.4 Environment, Human Rights, Health and Safety Risks” and shallbe deemed to be incorporated by reference and form part of the Non-Financial Information.

Airbus SE / Report of the Board of Directors 2020

61

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

2. Regulated Chemicals
Evolution of the chemicals’ regulatory framework may lead toshort- and long-term potential bans and restrictions, and resultin business disruption across the Company’s value chain.
With the aim of protecting human health and the environment,
regulators at national and international level have developed astringent set of legal requirements that are continuously evolving
to regulate, minimise the use of and eliminate various substances.
In order to reduce the use of targeted substances and mitigate
the risk of disruption in its operations and supply chain, theCompany’s policy is the development of alternative technologies
that use substances of less concern and substitution of thesewhen suitable alternatives meeting stringent certification
and airworthiness criteria are available for deployment.
Complementary to substitution, digital solutions are being
developed to improve traceability of regulated substances inour products from the early design steps down to the end of life.

IV. Initiatives
Industrial Operations
The Company is engaged in an industrial transformation to
anticipate mid-term evolutions of its industrial systems as well
as looking for longer term solutions to build its “factories of the
future”. This company-wide initiative will support the reduction of
its environmental footprint on air, soil and water quality, climatechange, biodiversity and resource availability. An evaluationof hotspots based on life cycle assessment studies of someCompany products is also ongoing to help focus on appropriate
topics.
In 2019, the Company rolled out High5+, a 2030 plan to reduce
the footprint of the Company’s activities globally and reachout to the supply chain. High5+ engages sites and functions,making sure that each area plays its part in delivering the global
2030 objectives. These objectives have been set in absolutevalue compared to 2015 levels to reduce energy consumption,
CO2 emissions, water consumption, VOC emissions and waste
production as follows:–– energy and CO2: reduce energy consumption by 20% andreduce direct (scope 1), indirect (scope 2) and oversize
transportation (scope 3) net GHG emissions by 40%.
This target has been set following the “Science Based Targets”
methodology in line with a “well below 2° C” scenario. Longer
term, the Company has set as its own ambition to reachnet‑zero GHG emissions for its manufacturing sites and itssite operations by 2050;–– waste and raw materials: divert 100% of the waste fromlandfilling and incineration without energy recovery, andreducing the amount of waste produced by 20%;–– air emissions: comply with air emissions regulations with 0%increase of air emission by 2030;–– water: develop strong maintenance and rehabilitation
programmes to improve reliability and lower costs in orderto reduce water purchase by 50%, with no increase in water
consumption.

Below is a table showing the status of the Company’s performance relative to the High5+ objectives.
2030
TargetBaseline(2015)

20192020

2020 v.
20192020 v.
baseline

Coveredscope

Energy (in GWh)

-20%

2,911

2,980

2,673

-10%

-8.2%

76.8%

CO2e (in ktons)

-40%

1,060

1,102

880

-20%

-17.0%

94.4%

Waste:
Landfilled and incineration
without energy recovery

0%

20%

25%

28%

-20%

102,944

99,122

74,710-25%-27.4%

99.8%

VOC (in tons)

0% increase

1,445

1,474

1,112

-25%

-23.0%

100.0%NOX (in tons)

0% increase

256

281

237

-15%

-7.3%

99.7%

SOX (in tons)

0% increase

15

15

14

-7%

-5.2%

100.0%

Waste produced
Air emissions:

Water:-50%

3,096,681

3,563,517

2,817,841

-21%

-9.0%

99.4%

0% increase

3,486,848

4,061,565

3,315,304

-18%

-4.9%

99.5%

Water purchased (in m3)
Water consumption (in m3)

Geographical scope
73 sites. Subsidiaries added in 2020 perimeter of High 5+ (contributing to baseline): Premium Aerotec, Stelia and PZL.

---Excluded sites: ATR Blagnac, ATR Francazal, Satair Ashburn, Satair Copenhagen, Satair Miami, Satair Singapore.
Scope of metrics--Energy: Natural gas consumption, Propane consumption, Stationary Distillate fuel oil consumption, Biomass consumption, Purchased electricity consumption,
Purchased heat/steam consumption.
--GHG Scope 1 & Scope 2: all GHG emissions associated with Energy metrics, GHG emissions reductions from Renewable Certificate & Sustainable Fuel Aviation, GHG
emissions from jet fuel aircraft / Kerosene consumption, GHG emissions from kerosene consumption from Beluga flights.
--Scope 3: GHG Emissions from Oversize Transport.
--Scope 3 Use of Sold Product data is excluded from coverage calculation.
--Volume of purchased water, Water consumption.
--Total amount of waste produced, Amount of waste going to energy recovery, Amount of waste going to material recovery, Amount of waste going to landfill (calculated as Totalamount of waste produced – Amount of waste going to energy recovery – Amount of waste going to material recovery) and excluding exceptional waste.
--Total VOC emitted, Total NO emitted, Total SO emitted.
x

62

x

Airbus SE / Report of the Board of Directors 2020

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The 2020 status shows a significant decrease of environmental
footprint compared to 2019 due to the unexpected andunprecedented COVID-19 crisis, materially affecting theCompany’s commercial aircraft operations.
CO 2 emissions have decreased by around 20% in 2020 due
to the decrease of industrial activities mainly in the Company’scommercial aircraft operations. Purchased water volume has
followed a similar trend, decreasing by 21% in Europe, whichreflects the impact of lower activities and presence on site due
to confinement and remote-working scheme deployment as well
as some efficient recovery on leak detection and remediation.
Overall waste produced and VOC emitted have dropped byaround 25%, reflecting the production rate reduction of Airbus
commercial aircraft industrial activities.

Annual objectives
In order to better embed this ambition into the Company’s
performance management, the Executive Committee agreed in2019 to include a reduction target for 2020 (compared to 2019)of -2.7% for CO2 and -5% for purchased water (see table below)
as part of the Company’s top objectives.
In 2020, the Executive Committee agreed to include reduction
targets of -3% for CO2 and -5% for water for 2021 (compared to2020) as part of the Company’s top objectives.
As such, these annual targets form part of the CEO’s and other
Executive Committee members’ remuneration. In 2021, the CO2target will also be included as a non-financial KPI in the variable
remuneration of executives and success sharing for all eligible
employees.

Nevertheless, significant effort has been made on every
environmental aspect with regards to metering and digitising dataacquisition and analysis in order to comply with long-term objectives.
For 2020, the CO2 and Water annual performance is described in the table below:
Target201920202020 v. 2019

CO2e (in ktons)

-2.7%

909

724

-20.4%

77.5%

Water (in m3)-5%2,465,934

1,998,721-18.9%

70.5%

Covered scope

Annual objective on CO2
Geographical scope
In 2020: 42 sites. Additional sites are integrated in the scope each year, when efficient monthly monitoring and projects roadmap are available.
Excluded: subsidiaries and Airbus sites outside Europe.

--Scope of metrics--Scope 1 & Scope 2: Natural gas consumption, Propane consumption, Stationary Distillate fuel oil consumption, Biomass consumption, Purchased electricity consumption,
Purchased heat/steam consumption, Mobile Distillate fuel oil consumption & all GHG emissions associated, GHG emissions from Flight Tests jet fuel aircraft / Kerosene consumption(except Airbus Helicopters & Airbus Defense & Space), GHG emissions from kerosene consumption from Beluga flights.
Scope 3: GHG Emissions from Oversize Transport.
Scope 3 Use of Sold Product data is excluded from coverage calculation.

----Excluded: refrigerant leakage, butane consumption, electricity on site from CHP, emissions due to processes.

Annual objective on water purchase
Geographical scope
In 2020: 34 sites. Additional sites are integrated in the scope each year, when efficient monthly monitoring and projects roadmap are available.
Excluded: subsidiaries and Airbus sites of outside Europe.

--Scope of metrics--Volume of purchased water.
Other Initiatives

Since 2019, a blend of sustainable aviation fuels (“SAF”) is usedin the operation of the Company’s Beluga transport aircraft used
for internal logistics and will progressively ramp up by 2030.
In 2021, flight test activities will be included in this ambition.
In the same timeframe, the share of renewable electricity used
in industrial operations in Europe will progressively increase toreach 100% before 2030.
The Company also promotes the development of a circular
economy model, investing heavily in Life Cycle Assessment(“LCA”) tools and leveraging digitalisation to optimise material
utilisation and reduce use of critical resources. As an example,
as part of its Ecodesign initiative, the Defence and Space Divisionused LCA in the development of the Sentinel satellites that it isbuilding for the ESA.
The Company has also been proactive in seeking ways to reuse
and recycle materials beyond their initial life. Not only does theCompany send around 50% of its waste to be recycled, buttoday, through the TARMAC Aerosave joint venture, more than
90% of an aircraft weight is recycled or reused through a selective
dismantling (reverse manufacturing) process. In 2021, all carbon
fibre waste from commercial aircraft production will be recycled
by a specialised subcontractor. Wherever its industrial activities
have an impact on biodiversity (e.g. when building a new site or
extending an existing one), the Company is engaged with local

partners on conservation and remediation projects to preserve
the affected flora and fauna and ensure they are not adversely
affected by the Company’s activities.
Noise around the Company’s sites can also be an important
topic for neighbouring communities. The Company is actively
engaged with local authorities and the affected population tominimise its impact, by adapting operating times and actively
seeking to reduce the noise at the source. In Toulouse, Airbus
has launched the Median initiative regrouping actors in chargeof flight activities around the airport to find the most effective
solution to reduce noise levels.
Light pollution caused by Airbus activities has been deemed to
be non-material to the Company’s value chain.

Use of Carbon Offsetting
In 2019, the Company introduced a mechanism to compensate
emissions of activities for which reduction and use of renewableenergy are not sufficient to meet the internal targets, such as
air and sea activities. This mechanism follows an approach of
avoiding and reducing GHG emissions in absolute value firstto later compensate when necessary. Due to the COVID-19
crisis and related production rate adaptation, no compensation
was required in 2020 to achieve CO2 reduction targets. As partof its plan to tackle scope 3 emissions, the Company also
compensates all emissions linked to air business travel.

Airbus SE / Report of the Board of Directors 2020

63

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The Company built a rigorous procurement process basedon the concepts of additionality, real (permanent) reduction,
prevention of double counting, prevention of overestimationand no additional harm. As a minimum, the carbon offsets
need to be certified by the Gold Standard (or Verra for certain
projects) and the supplier needs to show proof of how each oneof the mentioned criteria were met. In addition, understandingthat these carbon offsetting programmes may have gaps intheir methodologies, it was requested additional proof of how
such gaps are managed by the provider. Moreover, certain
societal aspects were considered, such as prevention of childlabour and the relation with the communities surrounding the
projects.

Product Operations
Aviation connects and unites people, cultures and business. It
drives economies and development, creates jobs and safeguards
world peace by promoting multilateralism, diplomacy and conflict
resolution. A more connected world is a more prosperous world.
Prosperity is critical to driving human progress and addressing
the world’s greatest challenges, especially climate change:
according to Our World in Data, air transport as a whole
represents approximately 2% of global human-induced GHG
emissions, and around 12% of the transport sector emissions– see graph 1.

reAgricultu
Energy in hing (1.7%)& Fis

EnergyEnergy
73,2%

73.2%

)
.5%
Ene
rgy use i building (17n

The Company is committed to contributing to meeting theParis Agreement targets and leading the decarbonisation of theaviation sector in cooperation with all stakeholders. The Company
is convinced that carbon-neutral aviation is not only possible, butachievable within our lifetime. This is why the Company has the64

Airbus SE / Report of the Board of Directors 2020

6%
10.
stry
u
d
n
er i
Oth

)
9%
10.
(
s
ing
build
Residential

Av
iat
ion

Roa
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nspo
rt 11
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Sh ail ( line
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rom
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issioion 5.8met
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ene

Co
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ercia
l (6.6%)Fpe
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ch
pe &
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r & tob
ica
a
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.6%
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es
tat
ion
Cro
2.2
p
%
Gra landAgriculture,ssla
1.4
Lan nd 0.1 %Agriculture,
Forestry&
dfills%
1.9%
Waste
Forestry
Land
Use&
wate
r (1.3
Land Use
%)
18.4%
Was
18,4%
ChemicW
tea3s
als 2.2%
.te
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3,2%
IndustrInduy stry5.2%
5,2%Cement 3%

Ene
rgy
us
ei
n

)
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y
er
hin
ac
M

Tr
an
sp
ort
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rn
ing

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No
n-fe
rrou
s

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anure
ck & mLivesto

%
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al s
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ce
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me
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%)

Graph 1: Global greenhouse gas emissions by sector – source: Our World in Data with data from Climate Watch,
the World Resources Institute (2020)

ambition to develop the world’s first zero-emission commercial
aircraft by 2035. In parallel, the Company is also developing a
multifaceted climate-impact programme for commercial aircraft.
This includes a focus on SAF, Air Traffic Management (“ATM”)
solutions and market-based measures.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Reporting of Airbus’ Emissions from Sold Products
anticipated lifetime is estimated at around 740MtCO2e (of whicharound 130Mt are linked to upstream fuel production), whichtranslates to an average efficiency of 66.6gCO2e per passengerkilometre. In 2020, the Company delivered 566 aircraft withresulting estimated lifetime emissions of around 440MtCO 2e(of which 80Mt are linked to upstream fuel production) andaverage efficiency of 63.5gCO2e per passenger-kilometre.

The main contribution of the Company’s value chain on climatechange comes from the use of sold products, especiallyrelated to its commercial aircraft activities. This was highlighted
by internal studies done in 2019 showing that over 97% of acommercial aircraft product’s GHG emissions occur during theflight operation phase.
In order to provide the level of transparency expected bystakeholders and following recommendations from the TCFD,
the Company has extended its reporting to include the in-use
emissions of commercial aircraft delivered in 2019 and 2020
(Scope 3 – Use of sold products). In the future, this reporting will
progressively be extended to the impact of the Company’s otherfamilies of products, for which the calculation methodologies
are still under development. By taking this significant step, theCompany becomes the first aircraft manufacturer to report on
the emissions produced by its products during their operation.

For the purpose of this calculation, the operating conditions of theaircraft were considered to be static over the whole service life.
Therefore, it has to be taken into account that these numbers do
not reflect the anticipated gradual introduction of decarbonisation
measures such as SAF and probably constitute a “worse casescenario” in terms of carbon intensity. As such they represent
an unmitigated scenario that can only serve as a general basis
to assess carbon emissions efficiency improvements over time.
The Company calls for a sectoral alignment on thesemethodological aspects through the relevant international
bodies in order to provide consistency in the way such impacts
are calculated and communicated throughout the air transport
sector.

In 2019, the Company delivered a record 863 commercial aircraft.
Based on an average lifetime in service of around 22 years(average lifetimes specific to each aircraft type were used in thecalculation), the total CO2 emissions for these products over their

Methodology-- The Company’s emission calculation methodology was developed by a joint team compromising key personnel fromthe Engineering and Environment departments and is aligned with the guidance provided by the Greenhouse Gas Protocol.
The external auditor performed a review of the calculation methodology applied by Airbus and assessed the reasonableness ofthe supporting assumptions.

-- The Company has used a number of assumptions based on internal and external information including assumptions based on

publicly-available data. These assumptions include the aircraft load factor, the current penetration rate of sustainable aviation
fuels, their CO 2 reduction potential and the indirect emissions index from jet fuel production, emission factors, as well as aircraft
operational usage and average in-service lifetime. Primary data collected within the Company was also used, such as the type ofsustainable aviation fuel considered or aircraft performance and configuration parameters.

Key Hypothesis-- The estimation includes emissions related to CO , CH and N2 . Emissions related to NO were estimated and excluded given the
2

4

0

x

uncertainty related to the NOx emission factors and the relatively low contribution of this emission stream.

-- Emissions related to aircraft engine start and taxing have been included, however, emissions from the Auxiliary Power Units (APU)
and ground handling equipment have been excluded.

Aviation Industry Targets
The aviation sector’s efforts to reduce its environmental footprint
are not starting today. Significant achievements have alreadybeen made. CO2 emissions per revenue passenger kilometre
have been reduced by around 50% since the 1990s. Aviation
has managed to decouple the increase in CO2 emissions fromits traffic growth and has improved its energy intensity quicker
than any other mode of transport.
In 2008, the aviation sector was also the first to commit toambitious CO2 emission reduction goals through the Air Transport
Action Group (“ATAG”):–– improving the fuel efficiency of the worldwide fleet by anaverage of 1.5% per annum between 2009 and 2020. This firsttarget has been achieved with more than 2% CO2 reduction
throughout the period;–– stabilising emissions from 2020 with carbon-neutral growth.
This means that even though air travel is increasing, greenhousegas emissions will not;–– reducing net emissions from aviation by 50% by 2050
compared to 2005 levels.

Since 2019, the ATAG has further worked to confirm these goals
can be attained by assessing several scenarios with ranges ofimprovement for each mitigation option (technology and design
improvements, operational and ATM enhancements, SAF andhydrogen non drop-in solutions, and ICAO CORSIA offsetting
mechanism).
The ATAG updated its ambition with the “ATAG Waypoint 2050”
report released in September 2020, which confirms that the2050 ambition is indeed attainable, but that global aviation will
be able to hit net-zero emissions a decade or so later, with someparts of the world able to move faster towards this point. In
its most ambitious scenario, a reduction of up to 40% of CO2
emissions can be achieved through technological developments,
as illustrated by the scenario S3 – see Graph 2.
The Company believes that an approach which focuses on
accelerating technological development, in complement to a
dynamic deployment of SAF, should be pursued. This would forma strong basis for the development of hydrogen powered aircraft
and the associated infrastructure and minimise the recourse tooffsetting to achieve the ambition.

Airbus SE / Report of the Board of Directors 2020

65

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Graph 2: The Aviation Industry’s Roadmap to Significant Emissions Reduction by 2060
CO2 emissions (millions of tonnes)
2,500

2,000
Emissions reduction
contributions in 2060
1,500

42%
1,000

8%
50%

(OR SAF + OFFSETS)

500

INDUSTRY 2050 GOAL
0
2015

2020

Technology

2025

2030

2035

2040

Operations
and infrastructure

2045

2050

Sustainable
Aviation Fuel

2055

2060

Offsetting

Source: ATAG Waypoint 2050 report (2020)

On the European scene, the EU Green Deal offers many
opportunities for the Company and the European aviationindustry to speed up the transition: the Company shares theambition to reach a net zero carbon aviation ecosystem in Europe
by 2050, and will contribute to the EU’s 2030 ambition. At theinternational level, the Company actively supports and strongly
encourages the International Civil Aviation Organisation (“ICAO”)
to introduce a global level of ambition in setting meaningful longterm aspirational goals for international aviation in 2022 andhence to maintain a global level playing field.

Airbus’ Roadmap to Reducing Emissions
The Company is investing in and focusing its efforts on five key
areas to reduce its environmental footprint, in support of theoverall sector ambition as highlighted above:

1. Replacing Current Fleets with More Performant Aircraft
The Company is continuously improving its products throughnew designs, advanced materials, upgraded systems andmore fuel-efficient engines. Thanks to significant investments

66

Airbus SE / Report of the Board of Directors 2020

into new aircraft designs, the Company’s commercial aircraft
products have reached a rolling average of 2.1% fuel efficiency
improvement annually over the past ten years, exceeding targets
set by the industry through ATAG – see graph 3.
The Company’s commercial aircraft portfolio comprises today
the most efficient aircraft product line:–– A350 and A330neo offer 25% reduction in fuel burn andsignificantly reduced noise footprints versus the previous
generation of aircraft;–– the A320neo family brings a 20% reduction in fuel burn, andnearly half the noise footprint;–– A220 offers 25% reduction in CO2 emissions per seat versus
current generation of small single-aisle aircraft, 50% reduction
in noise footprint and 50% fewer NO x emissions than thestandards.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Graph 3: Average Intensity Metric (gCO2 /pax.km)
Intensity metric (gCO2/pax.km)
85

80

75
A350XWB introduction
70

A320Neo introduction

65
A330Neo introduction

60

55
2010

2012

2014

2016

2018

2020

Delivery year

2. Investing in Technologies Enabling us to Market Zero-Carbon Vehicles
The Company is committed to contributing to developing,building and testing alternative-propulsion systems – poweredby electric, hydrogen and/or solar technology – to enable theaviation industry to disruptively reduce the CO 2 emissions ofcommercial aircraft, helicopters, satellites and future urban air
mobility vehicles. In 2019, the Company invested € 3,4 billion in
R&D for the development and improvement of its product line.
Zero-Emission Commercial Aircraft Ambition
The Company’s work in electric flight has laid the groundwork for
our future concept of zero-emission commercial aircraft known
as ZEROe. The Company is now exploring a variety of hybridelectric and hydrogen technology options.
Hydrogen is a high-potential technology with a specific energyper-unit mass that is three times higher than traditional jet fuel.
If generated from renewable energy through electrolysis, it emits
no CO 2, thereby enabling hydrogen-based synthetic fuels topotentially power large aircraft over long distances in a carbon
neutral way.
Because hydrogen has a lower volumetric energy density, thevisual appearance of future aircraft will likely change. This is tobetter accommodate hydrogen storage solutions that will bebulkier than existing jet fuel storage tanks.
From hydrogen propulsion (via direct burn or fuel cells) tohydrogen-based synthetic SAF, from pod configuration toblended-wing aircraft, The Company is evaluating, maturing andvalidating radical technological breakthroughs which could be
hosted on its zero-emission aircraft by 2035.
The Company is also investing in the proper facilities to test these
new technologies. Inaugurated in October 2019, the E-Aircraft
System House (EAS) is, with more than 3,000m2, the largest test

house dedicated exclusively to alternative propulsion systems
and fuels in Europe. This means the Company can now test thelatest electric motors and hybrid-electric engines directly on its
own premises, and develop its own low-emission alternative
propulsion units.
The Company goes beyond technology maturation bycollaborating with the right ecosystem. In 2019, the Company
signed a Memorandum of Understanding with airlines suchas SAS Scandinavian Airlines and easyJet to jointly research
into a zero-emission aircraft eco-system and its infrastructure
requirements. The Company is also part of the Hydrogen Council
and launched a joint-venture in 2020 with ElringKlinger in order
to benefit from the huge cross-industry experience of others,
and accelerate its ambition.
Zero-Emission Urban Air Mobility
Since 2014, the Company has been exploring how recent
technology advancements – from battery capacity and autonomy
to electric propulsion – can help drive the development of new
kinds of aerial vehicles with the potential for zero emissions whenpowered by renewable energies. In May 2018, the Company
created the Urban Mobility entity to take its exploration into
cutting-edge commercial urban air mobility solutions andservices to the next level.
The idea for a compact “flying taxi” first came from the Company’s
desire to take city commuting into the air in a sustainable way.
The Company began by rethinking traditional aircraft architecture,creating a multirotor design based on electric motors. Thus,
CityAirbus was born. To date, the CityAirbus sub-scale model
has flown more than 100 test flights, which has proven the
aerodynamic configuration of the full-scale prototype.

Airbus SE / Report of the Board of Directors 2020

67

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Zero-Emission High-Altitude Pseudo-Satellite
Today, the Company is advancing solar cell technology to enable
unmanned aerial vehicles to stay aloft in the stratosphere forextended periods – using only sunlight as energy.
The Company’s work in solar flight is focused on:–– developing advanced photovoltaic solar panels that are lighter,more flexible and capable of capturing more energy per m2
of surface;–– converting captured solar energy into electrical energy to power
an electric-propulsion system and other onboard equipment;–– harnessing solar energy into a rechargeable energy storage
system, thereby enabling the aircraft to fly at night withunlimited autonomy.
The Company’s flagship programme, Zephyr, is a high-altitude
pseudo-satellite that is powered exclusively by solar energy.

However, today the price and global production capacity remain
the main constraints preventing operators from massively
incorporating these types of fuels. The rapid scale-up of SAF plays
a major role in aviation’s decarbonisation scenarios, decreasing
emissions of the Company’s product in use. The Company
therefore supports policies that would incentivise their usage.

3. Investing in Smart ATM Solutions and Optimised
Operations

5. Encouraging Temporary CO2 Emission Compensation
Schemes

The Company is developing digital solutions (through its
subsidiary Navblue and its digital platform Skywise), and willcontinue to support its customers to minimise fuel consumption
with best operational practices, innovative services and training.
Improving operations and infrastructure could contribute toemission reductions by around 10%. The Company supports
initiatives aimed at reducing ATM inefficiencies (such as the Single
European Sky Air Traffic Management Research programme –SESAR), while working on disruptive practices, such as formation
flying.
In November 2019, the Company launched the fello’fly project
which aims to demonstrate the technical, operational andcommercial viability of two aircraft flying together for long-haul
flights. Through fello’fly, a follower aircraft will retrieve the energy
lost by the wake of a leader aircraft, by flying in the smooth
updraft of air it creates. This provides lift to the follower aircraft
allowing it to decrease engine thrust and therefore reduce fuelconsumption in the range of 5-10% per trip. By end 2020, theCompany’s fello’fly had signed agreements with two airline
customers; Frenchbee and SAS Scandinavian Airlines, as wellas three Air Navigation Service Providers (ANSP) to demonstrate
its operational feasibility; France’s DSNA (Direction des Services
de la Navigation Aérienne), the UK’s NATS (National Air Traffic
Services) and European Eurocontrol.
In December 2020, after two years of experimental entry-intoservice programmes and more than 20,000 flights carried out by
about 90 A320 aircraft from six airlines (Air France, British Airways,
easyJet, Iberia, Novair and Wizzair), the “4D-Trajectory BasedOperations” project led by the Company alongside more than 15
partners in the frame of the SESAR programme came to an end.
The project focused on analysing the real-time transmission of
four-dimensional trajectory data (latitude, longitude, altitude, time)
as a solution to better inform ATM operations, and significantly
improve aircraft emissions.

4. Developing and Deploying SAF
The main driver of the Company’s commercial aircraft products
emissions and CO 2 intensity is the energy source. Although
they only represented a small share of aviation’s current fueluse in 2020, SAF (biomass-based or synthetic) are key in the airtransport sector decarbonisation strategy.
Since 2008, the Company has acted as an important catalyst in
the certification process, demonstration flights, partnerships andpolicy advocacy of sustainable jet fuel. Since 2011, over 250,000
commercial flights have used SAF.
All the Company commercial aircraft are already certified
to fly with a fuel blend including up to 50% of SAF, and theCompany ambition is to reach a certified 100% blending capacity.

68

SAF produced using the most advanced pathways can provide
CO 2 emission reduction of up to 80%. This means thattoday, the emissions from aircraft currently offered by theCompany could be reduced by 40% if their potential was
fully used. As detailed above (see section “Aviation industry
targets”), the Company supports decarbonisation scenarios
which include an ambitious rollout of SAF. Under such scenarios,
the Company estimates that products delivered in 2020 could
see their lifetime emissions reduced by around 10% thanks to thegradual introduction of SAF during their operational life.

Airbus SE / Report of the Board of Directors 2020

Finally, temporary CO 2 emission compensation will be
instrumental to stabilising aviation’s emissions in the medium
term until disruptive solutions reach maturity. For that reason, theCompany supports ICAO’s CORSIA as the only global marketbased measure for international aviation.
Sustainable Space Products
Beyond commercial aviation, the Company’s Defence and Space
Division delivers satellites and intelligence that informs decision
making on significant environmental issues. Its aerial imagery ofclimatic and environmental changes around the planet reveals
the scale of change and dependencies at work.
The Company is working to ensure a sustainable spaceenvironment to prevent space debris and protect valuable
national assets, such as satellites, that are in orbit around theglobe. Airbus Defence and Space is the first company to test
technologies which clear out space junk and avoid spacecraft
collisions. Three main debris-removal technologies have beentested in orbit: harpoon, net and vision-based navigation.
As space law evolves, the Company is committed to ensuring its
products meet these new regulations (such as the French Space
Operations Law requiring to avoid satellite collisions and ensure
the safe removal of spacecraft from useful orbit at the end of life)
as it believes in the importance of promoting sustainable space.
Substances Roadmap
Many substances used in the global aerospace industry toachieve high levels of product quality and meet stringent technicalperformance, airworthiness and reliability requirements are
subject to strict regulation.
In the aerospace industry, regulations on substances impact
key processes and products, such as surface treatments, paints
and fire protection.
The Company remains committed to move towards replacementof such substances in products and processes. To help achievethis, the Company has put in place a portfolio of activities andprojects, working with suppliers to identify, develop, qualify anddeploy new technologies and solutions that avoid the use of
substances classified as posing a risk to human health or theenvironment, whilst satisfying airworthiness, certification andperformance requirements.
The Company also engages with suppliers to promote theadoption of a similar approach through regular communicationand more widely, by working together with the aerospace industry
to promote worldwide harmonisation of regulations and ways
of working, taking into account the sector’s safety and lifecycle
specificities.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Using information obtained from its suppliers, the Company
tracks, registers, assesses and declares regulated substances.
Since 2011, the Company has analysed the impact of over
1,100 substances and qualified and deployed substitutes forover 100 substances in 300 products.
Currently, the Company is actively working to substitute65 substances in its own design, and an additional 45 in its
supply chain, over the next five years.
The Company invests substantial time and resources in
research and development for technologies that use alternatives
to regulated substances. When it can be demonstrated thatthese technologies meet the strict safety and reliability criteria
required for aviation, the Company seeks to implement themin its aircraft design and manufacturing. For example, in 2006,
the Airbus Chromate-Free project was launched with the aim ofdeveloping, qualifying and deploying chromate-free alternatives
to materials containing and processes using chromates inaircraft production and maintenance. Chromate-free external
paint systems developed initially for the A380 programme
are now used in all Airbus commercial aircraft manufacturing
programmes and across the aerospace industry. Anotherexample is the Airbus Basic Primer project that researches
potential alternatives with the aim of phasing out the green
chromated primer coat.

V. Future Outlook
The Company is always researching innovative ways to improvethe environmental performance of its products. Below are a few
examples of such projects that will make future aircraft moresustainable.

In order to advance aerodynamics research, the Company has
developed a scale demonstrator aircraft with the first inflight,
freely flapping wing tips that could revolutionise aircraft wing
design through a biomimetic approach. Known as AlbatrossONE,
this remote controlled aircraft has already taken its first flights
to prove the concept.
In 2020, the Company revealed MAVERIC (Model Aircraft
for Validation and Experimentation of Robust Innovative
Controls), its “blended wing body” scale model technologicaldemonstrator. MAVERIC features a disruptive aircraft designthat has the potential to reduce fuel consumption by up to
20% compared to current single-aisle aircraft. The “blended
wing body” configuration also opens up new possibilities for
propulsion systems type and integration, as well as a versatilecabin for a totally new on-board passenger experience.
In an effort to improve the circularity of its products and reduce
the need for non-renewable resources, the Company actively
researches innovative new materials that could be used in thenext generation products. Such projects include for instancebamboo based bio-composites for aircraft structures, or using
algae to turn the atmosphere’s CO2 into carbon fibre.
“We have made the commitment to bring CO 2 emissions tohalf of 2005 levels by 2050. A new generation of technology,
research and development, and our total respect for the planet
lay the foundation for a more sustainable aviation industry.
By demanding more of ourselves in the areas of research,
supply, production and operations, we can demand less of ourplanet. This clears the path toward a future in which we canconnect more people than ever before, in the most sustainable
way possible.” Guillaume Faury – Airbus CEO.

6.1.3 Builds its Business on the Foundation of Safety & Quality
a. Aviation and Product Safety
I. Introduction
The Company believes that everyone in our industry has arole to play to further enhance the safety of the air transportsystem. Flying today is safer than ever before, and collective
efforts continue to ensure it will be even safer by anticipating
and responding to risks, threats and challenges. Whilst thefoundations of the air transport system are built on regulatorycompliance, the safety culture at the Company goes beyond
compliance with certification and continued airworthiness
requirements to also focus on safety enhancement activities
in products and services and implementing enhancements
when appropriate. This also extends to the products andservices of the Company’s Defence and Space Division thatoffer communication, collaboration and intelligence knowledge
solutions to assist government authorities, emergency service
providers and healthcare providers.

II. Governance
A dedicated safety organisation within the Company acts as anindependent voice of safety. The Chief Product Safety Officer forthe commercial aircraft activities of the Company reports directly
to the CEO and is the Chairman of the Product Safety Board(“PSB”). Several Executive Committee members and senior
executives are part of the PSB. This ensures proactive safety
decision making is based on multidisciplinary assessments at
the highest decision level of the Company. The PSB makes
decisions regarding technical aspects, safety governance andstrategy.

Airbus Safety Management System
Consistent with ICAO Annex 19, the Company’s Corporate Safety
Management System (“SMS”) is based on the four ICAO pillarsof safety policy and objectives, safety risk management, safetyassurance and safety promotion. The Company’s Corporate
SMS principles also integrate the end-to-end approach to safetywith the Company’s suppliers and operators. This is facilitatedby an appointed Corporate SMS Officer and SMS officers
per function with support from a network of nominated SMS
Representatives throughout the Company.

Airbus Safety Strategy
The Company’s safety strategy is based on the top safety
threats or opportunities and provides the associated key safety
objectives for the safe operation of Airbus aircraft. It is a fiveyear projection, which is reviewed and updated annually, andresponds to EASA’s annual European Plan for Aviation Safety.

Regulatory Compliance
Product certifications are provided by the competent aviation
authorities including the main civil aviation authorities and specificmilitary authorities. Within each Division, and according to theirrespective functions, the Company works to ensure compliancethrough design and certification of products under EASA Part 21
Design Organisation Approvals (DOA); ECSS-Q ST-40-C for(Space Products) and Def-Stan 00-56 (Defence Products);
manufacturing under Production Organisation Approvals (POA);
monitoring of in-service safety through approved EASA Part-M
Continuing Airworthiness Management Organisations (CAMO);
aircraft maintenance and retrofit operations conducted in linewith civil and military EASA Part 145 regulations; and training

Airbus SE / Report of the Board of Directors 2020

69

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

provided to flight crews, cabin crews and maintenance crews
through EASA Part 147 Approved Training Organisations (ATO).
The certified organisations within the Company where specificapprovals are granted by the aviation authorities, are audited
and monitored by these authorities to ensure compliance withregulatory requirements. Additional audits are conducted bythird parties as part of the quality certifications appropriate toeach Division, including EN9100, EN9001, EN9110, AQAP 2110,
AQAP 2210 and AQAP 2310.

Commitment to Just and Fair Culture
The product safety and quality of the Company’s products is its
first priority. Each employee of the Company, at any level, shall dotheir utmost to ensure that product safety is never compromisedand quality is considered in everything they do. This commitment
is documented and endorsed with the signature of the CEO,
Executive Committee members and top management of all
functions. It includes the commitment to ensure the appropriate
reporting channels are available and known to all employees
to report product safety and quality related matters in an
atmosphere of trust and empowerment.

III. Risk Management
Applying proactive risk management principles has contributed
to significant improvements for the safety of flight in recent
decades. This risk management approach drives the Company’s
Corporate Safety Process, which has been in place for morethan 15 years. It supports the principles of the Company’s safetyenhancement culture, going beyond compliance with certification
and airworthiness duties.

IV. Initiatives
Consistent with its end-to-end approach and as part of its safety
strategy, the Company has several collaborative initiatives that
contribute to reinforcing resilience capabilities in the air transportsystem and enhancing the safety level of its products with all
key actors.

For example, the Company is working with its supply chain toextend its safety enhancement principles with its suppliers.
This includes specific SMS forums and initiatives with theit’s suppliers, which reinforce the collaborative approach for
optimising responses to in-service feedback and reports.
D10X (short for Air Transport Safety, Destination 10X Together) is
another collaborative initiative with airlines. The aim of D10X is to
propose pragmatic solutions together with operators of Airbus
aircraft for the key safety issues identified within this network.
Sharing safety information is a key contributor to increasing thelevel of safety. There have been 25 flight safety conferenceswith the Company’s customers since the first was held in 1994.
Another means of sharing information is through “Safety first”,
the Company’s safety magazine contributing to the enhancementof safety for aircraft operations by increasing knowledge andcommunication on safety related topics. It reaches over 50,000
readers in the aviation community every month via the website
safetyfirst.airbus.com and the Safety first app.
In addition to these external safety promotion initiatives, theCompany invests in internal safety promotion with the objective
to continuously reinforce the safety culture of all employees.
This is supported by different means including communication
campaigns, training, safety awareness sessions, and developmentof a Safety Promotion Centre. SMS officers are nominated andtrained in all key business functions to ensure implementationand operation of SMS within the Company, including safety
promotion. The above mentioned commitment to a just and fairreporting culture is another example of initiatives that promote
the Company’s safety culture. These elements are integrated in
the Company’s SMS action plan.
All of these initiatives and the enhancement of the safety culture,
combined with the benefits brought by technology, leads tocontinuous improvement of the safety records. This is illustrated
in statistics (below) showing that the latest fourth-generation jets
are the safest. All Airbus Fly-By-Wire family aircraft (including
A320, A330/A340, A380, A350, A220 fleets) are the latest fourthgeneration aircraft.

Function SMS OfficersFunction
Deployment& Training
SMS officers
deployment & training

Nominated 100%
Trained 92%

0%

20%

40%

60%

Fig. 1 (above) 2020 SMS Network -% of SMS officers nominated and trained (target 100%).

70

Airbus SE / Report of the Board of Directors 2020

80%

100%

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

10 Year Moving Average Fatal Accident Rate (per million fights) per Aircraft Generation
1.20
1.11
1.00

0.80

0.60

0.40

0.20
0.15
0.04

0.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Generation 2

Generation 3

Generation 4

Fig. 2 (above) 10 year moving average fatal accident rate (per million flights) per aircraft generation.

b. Health and Safety
I. Introduction
The Company’s philosophy is that the protection of people
is not only about compliance, it is an ethical and commercial
imperative. The Company wants to be a company where thesafety, health and welfare of people is valued as an integral partof our business sustainability. It therefore strives to maintain worldclass standards of health and safety.

Constantly measuring and monitoring our health and safety
performance is a key activity for the Company, in order tostimulate continuous improvement.

II. Governance

Health and safety resources are organised as a company-wide
function. This Centre of Excellence contains dedicated Centresof Expertise, which address the various specialised disciplinesof health and safety. The Centres of Expertise take a transversal
cross-divisional approach, engaging a network of competentprofessionals in all operational entities. The aim is to ensure
the global presence of competent professionals, to support aconsistently high standard of health and safety management
throughout the company, including all necessary measures
for the identification, evaluation and elimination or mitigation ofhealth and safety risks.

The Airbus Occupational Health and Safety Policy sets theframework and integrates health and safety activities that
support our goal. The Policy applies company-wide to Airbus
commercial aircraft activities, the Company’s Helicopters Division
and Defence and Space Division, including affiliates in which
Airbus has a controlling holding. The Policy principles are also
reflected in the Company’s Code of Conduct.

In 2020, the Company has needed to commit considerable
health and safety efforts to the management of COVID-19
pandemic issues. This has restricted the resources available
for the development of our global aspiration of ISO45001
based management systems. However, work has continued
in this regard at the corporate level, albeit more slowly and thecommitment remains unchanged.

As expressed in the Airbus Occupational Health and Safety
Policy and the Company’s Code of Conduct, the Company has
worked on a number of priorities, principles and key initiatives
in 2020, including:–– the continued identification and management of risks to people
and the business that could arise from our work activities;–– the application of the principles of the International Standard,
ISO 45001 for our management system; and–– the development of a culture in which we all take responsibility
for our health and safety and that of others.

Currently about one third of the Company’s core entities are
already ISO45001 certified, or are OHSAS18001 accredited
and are progressively transferring to ISO45001.

In 2020, the Company has pursued health and safety performance
improvements in our top company objectives, continuing ourjourney to ensure that everyone feels responsible for the healthand safety of themselves and others.

III. Risk Management
The health and safety function has naturally taken a leadingrole in the COVID-19 crisis management. Together with other
Company functions, such as procurement, facility management
and site management teams; experts from the medical, industrial
hygiene and safety teams have defined and coordinated themeasures necessary to cope with the COVID-19 pandemic.

Airbus SE / Report of the Board of Directors 2020

71

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

To mitigate the risks, the following key actions have been
performed:–– providing guidance on the core barrier measures supported
by awarenesses campaigns and material including posters,
videos and e-learning courses;–– securing distancing rules and other controls in buildings andcommon areas;–– purchasing and distributing surgical masks and digital
thermometers;–– supporting infection testing activities, both on and off-site;–– following-up COVID-19 positive cases and close contacts;–– reiterating and reinforcing the mental health support byproviding, for example, employee Helplines and comprehensive
guidance for maintaining both mental and ergonomic healthwhile remote working.

Some figures further representing our initiatives in Europe, around:

20 M>20,000>1,000Surgical masks
distributed

Calls to track COVID-19
cases and contact cases

Tests performed
to ensure aircraft deliveries
and business continuity

Airbus capitalised on its existing network of local support
roles jointly referred to as “Safety Ambassadors” to support
implementation of COVID-19 management measures.
This network provided a significant and valuable resource;
as an example, in France and Germany, around 500 Safety
Ambassadors were actioned in the Company’s Helicopters
Division. In Airbus commercial aircraft activities around 1,900
Safety Ambassadors were actioned or further nominated in
France, Germany, Spain and the UK. The clear, positive activityof this network during the crisis has reinforced our “We Are One”
approach to our health and safety culture.
Sadly, this does not mean that our colleagues have not been
touched, and our heartfelt sympathy is with those who havesuffered as a result of this pandemic.
The health and safety function has defined the company-widestandards and methods to be applied for risk assessment
and control, and the reporting and management of incidents.
The system to escalate significant health and safety risks to top
management has been reinforced. Serious risks are reported
using the Company’s ERM system and tool, thereby ensuring
efficient and effective decisions are made.
The main health and safety concerns remain the risk of injury,
ill-health, asset damage, business interruption and regulatory
action. In 2020, the main causes of injury that could arise fromwork activities included “slip, trip and fall”, ergonomics and the72

Airbus SE / Report of the Board of Directors 2020

use of hand tools and equipment. These represent the majority
of injuries recorded on the FISH global environment, health andsafety software platform.
Since 2018, the global scope of the FISH software platform
has been progressively extended as an integral part of acompany-wide management framework for health and safety.
The deployment of the incident management module and theoverall harmonisation process have enabled improvements indata collection and analysis, and the production of reports,
including the company-wide key performance indicator, (shownin below table). A key improvement in 2020 was the inclusion of
apprentices and temporary employees in the measurement of
the Lost Time Injury Frequency Rate.
The scope of the incident management module covers Airbus’commercial aircraft business and its Divisions in France,
Germany, Spain and UK, as well as the Airbus commercial aircraft
plants in Mobile, USA and in Tianjin, China and continues tobe progressively extended, including coverage of small sites.
Development of the platform is ongoing and the module tosupport the assessment and management of risks is now an areaof focus for the team.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Airbus and its Divisions Rolling 12 months Employee Lost Time Injury Frequency Rate

7

6

5.95

5.89

5.70

5.65

5.31
4.99

4.68

5

4.61

4.32

4.18

4

3.91

3.81

N

D

3

2

1
0
J

F

M

A

M

J

J

A

S

O

2020
AIRBUS
The rolling year average of the Lost Time Injury Frequency Rate has been very positively impacted in 2020 as a result of the various
safety activities and the particular circumstances linked to pandemic. The result is a more than 30% improvement in FR1, with an
end of year figure of 3.81 company-wide and 5.12 in the Company excluding the Divisions.

IV. Initiatives
The Company has pursued a range of key activities to promote
the health and safety culture in 2020. These activities havebeen instrumental in the reduction of lost time injuries, and haveincluded:–– the People Safety at Work initiative, which has deployed arange of diverse work packages in different sites, such asindustrial changes (work orders improvement, safe assets
deployment, safer infrastructure and site traffic safety), andculture-change activities (leadership training, communication
and awareness campaigns, and safety mind-set coaching);–– the People Safety network has also driven the wider
deployment of the “Safety Corner” and “Safety Lab”, which
are places to meet and exchange on safety topics, and to pilot
risk management ideas;–– awareness has been further raised by the company-widecommunication campaigns for COVID-19, and initiatives suchas the “WeCare” initiative within the Company’s Defence andSpace Division have addressed health and wellbeing;–– in parallel to the COVID-19 crisis management, the Company’s
employees’ health has continued to be protected byprogrammes that include mandatory and voluntary healthchecks, health campaigns such as flu vaccination campaigns,
skin, vein or cardiovascular screenings, stress or addictions
guides, and well-being management.

As well as reminding employees that health and safety is a priority,
promoting competence and encouraging skills maintenance, thecompany learning strategy supports the integration of health andsafety into the business culture.
The Company has pursued the harmonisation of employees’
training to ensure consistently high standards of delivery.
However, due to the COVID-19 crisis, learning deployment has
been impacted, with some non-essential classroom based
training deferred to enable a focus on legal and mandatory
training. The training team has adapted to the pandemic setting
by increasing the volume of digital training and introducing newconcepts, such as the “virtual classroom”.
Despite the challenging environment, we have managed todeliver over 103.070 hours of dedicated health and safety
training to 37,599 individual employees between October 2019
and September 2020.
The formal Leadership Development Strategy is now in full
deployment, with dedicated training programmes for theCompany’s executives and leaders of all levels.
More than 350 executives and senior leaders have completed
the Environment and Health & Safety Masterclass since
October 2019, with around 300 of those attending the new “virtual
classroom” format introduced in August 2020.

Airbus SE / Report of the Board of Directors 202073

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The Executive Back to the Floor module, which provides practicalskills for leaders to use in shop floor settings, has been so
successful that it is now being delivered to other managementtiers by specially selected and trained the Company’s employees.
Managers at all levels are continuing to attend the “Airbus
Environment and Health and Safety Leadership Certificate”. Thisintensive course has four modules, which, if completed withina certain period, lead to an externally validated “Environment,
Health and Safety Certificate”. Over 900 managers have attended
modules 1 and 2 since their launch in September 2018. Due todeferment of classroom training in 2020, around 500 managers
have been trained in 2020. Modules 3 and 4 will be developed inearly 2021, with the objective of starting deployment in Q4 2021.

V. Future Outlook
The Company is committed to securing this positive trend on
people safety and business sustainability. Thus further healthand safety initiatives are planned for the coming years, including
work environment enhancements, mind-set and behaviouralchanges, and integrating safety routines in the operating
systems. Underpinning this activity is the continuing work to
define and implement the formal ISO45001 based management
system, which will provide the structure, monitoring and analysis
necessary for continuous improvement.

6.1.4 Respect Human Rights
and Foster Inclusiona. Human Rights
I. Introduction
As a signatory to the United Nations Global Compact since 2003,
the Company is committed to upholding international humanrights principles and standards, including the International
Bill of Human Rights, the International Labour Organisation’s
Declaration on Fundamental Principles and Rights at Workand its Core Labour Standards. In doing so, the Company isimplementing policies and processes that meet the requirementsof the UN Guiding Principles for Business and Human Rights,
and the OECD Guidelines for Multinational Enterprises.
During 2019, the Company undertook a human rights impact
and gap analysis across its global business to better understandthe relevant impacts on human rights. This analysis, conductedwith the help of external consultants, considered current andupcoming regulatory requirements and international best practiceas well as growing human rights requirements linked to the
UN Guiding Principles for Business and Human Rights withinstandards such as the UN Global Compact.
During 2020, the Company progressed a number ofrecommendations outlined in this gap analysis. Details of theseactions follow.

II. GovernanceDuring 2020 the Company formalised its governancearrangements for human rights. Accountability for human rights
at Executive Committee level has been assigned to the EVPCommunication and Corporate Affairs. Starting October 2020,
focused human rights updates will be provided to the Executive
Committee, at a minimum of twice per year. In addition, regular
updates on human rights will be provided to the ECSC at Board
level. The Executive Committee will agree and guide the strategic
direction of the Company’s human rights ambition; agree andguide the prioritisation of initiatives and resource allocation for

74

Airbus SE / Report of the Board of Directors 2020

implementation; and review the status and effectiveness ofactions in progress (including roadmap/targets/KPIs). The ECSC
will make and support decisions on identified salient issues andemerging significant risks; make and support decisions on key
trends/ legislation and provide feedback and steering as required.
In support of these new governance arrangements and tocoordinate action on human rights, a new Human Rights
Steering Committee, chaired by the Head of Sustainability &Environment, and Human Rights Multi-Functional Team (“Human
Rights MFT”), led by an appointed lead for human rights, werecreated during 2020. The objectives of the Human Rights
Steering Committee include providing strategic guidance tosupport decision making and prioritisation as well as providing
guidance and support on progress, whilst the Human Rights
MFT will ensure the development and delivery of the humanrights roadmap, including actions against agreed targets andsupport awareness raising and capacity building. In addition,as part of the formalised governance arrangements on humanrights, the topic will be presented annually at the Societa Europea
Works Council (“SEWC”) meeting comprising social partners
from across the Company’s European sites.

III. Risk Management
Human Rights Due-Diligence
During 2020, the Company continued to roll out its supply
chain risk mapping programme, run through the Procurement
Responsibility & Sustainability team. See “– 6.1.6 Responsible
Supply Chain”. This built on the work which started in 2018 to map
the Company’s external suppliers based on high-risk countries andpurchasing categories, using third-party data, which consideredchild labour, modern slavery/forced labour, working time andwages as well as other criteria such as environment and health& safety. In 2019, working with an independent social assurance
provider, the Company began evidence based self-assessmentson those high-risk suppliers identified through initial mapping.
See “– 6.1.6 Responsible Supply Chain”. The self-assessments
gather evidence on social compliance criteria such as humanrights, employment practices and working conditions. By the endof 2020, initial assessments had been launched for all identified
external high-risk suppliers. Based on the results of the evidence
based self-assessments and internal analysis, the Company willconsider additional action including specific improvement actionplans and on-site audits as required. This work is in addition to
the checks which are carried out at the supplier onboarding stage
via the Company’s Ethics & Compliance organisation. During2021, the Company will continue to integrate this process within
the Company’s supplier qualification and monitoring process.
For information on the Company’s revised Supplier Code of
Conduct, including strengthened expectations and requirements
on human rights, see “– 6.1.6 Responsible Supply Chain”.
Building on the supply chain risk mapping programme, during
2020, the Company introduced a due diligence programmeof onsite social assessments focused on human and labour
rights, covering its own operations (including its subsidiaries
and affiliates) using an independent social assurance provider
consistent with the assessments carried out in its supply chain.
An initial programme of five locations was conducted during
2020, as a pilot exercise to inform the Company’s approach going
forward. The sites selected for the pilot were Airbus Defence& Space Ltd at Stevenage in the UK, Airbus Helicopters Pty
in Brisbane, Australia, Airbus Helicopters in Mexico, and theAirbus Delivery Centre and the FAL in Tianjin, China. In addition,evidence based self-assessment questionnaires, which included
an assessment of policies and processes linked to human andlabour rights, were conducted at STELIA Aerospace in France
and Premium AEROTEC in Germany, each of which are wholly
owned subsidiaries of the Company.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Analysis of the assessments and the recommendations for
improvement are ongoing. A minimum of four social assessments
will be carried out during 2021.

Airbus’ Identified Areas of Salient Issues
The human rights gap analysis undertaken in 2019 included an
initial identification of the Company’s salient areas of potential
human rights risks (see box with impacted groups in parenthesis).
This identification was based on benchmarking of industry peers
and companies in similar industries and analysis of stakeholder
expectations, including consideration from a rightsholder’s
perspective.
During 2020, the Company, through the Human Rights MFT,
reviewed its identified areas of potential human rights risks
and took part in an internal workshop to test these risks.
In addition, the Company engaged with a number of key external
stakeholders, including human rights NGOs, academics/
researchers and industry groups, to gain external feedback.
Following these consultations, the areas of salient issues
which the Company will focus on during 2021 are as follows(with impacted groups in parenthesis). Taking into account thatsalient issues may change over time due to internal and external
influences, the Company commits to reviewing these issues ona regular basis.

Salient Human Rights Issues–– Impact of products and services on the right to life and liberty(passengers and citizens).
–– Data privacy (individuals and their personal data).
–– The transition to decarbonisation (supply chain).
–– Forced and child labour and other labour rights (contractors
and supply chain).
–– Diverse and inclusive workplaces (the Company’s workforce
and contractors).
Salient Human Rights Issues-- Impact of products and services on the rights--

to life and liberty(passengers and citizens)

Data Privacy
Privacy risks in the Company exist in relation to its employees,
customers and any other individuals that will be impacted by
the use of its products and the management of its business.
However the scope of the data privacy salient issue is focusedon the risk derived from personal data being processed by theCompany (e.g., data on employees, suppliers, etc). The risk
linked to the misuse of the Company’s products by customers(having potential impact on the privacy of individuals) will be
addressed as part of the “impact of products and services”
salient issue.
To fur ther deploy the Company’s privacy programmethroughout the business and affiliates, Data Privacy Focal
Points are nominated in the functions and affiliates of theCompany (currently 1 focal point for every 350 employees).
The Data Protection Office trains, provides methodologies
to and coordinates the Data Privacy network and provides
expertise to the business.
The Data Protection Office manages risk by:–– deploying the Airbus Privacy Programme across the whole
Company;–– providing data protection laws and regulation guidance andmethodologies to the business. Promoting awareness andunderstanding of the risks, rules, safeguards, and rights inrelation to personal data processing;–– cooperating with national data protection authorities;–– maintaining Data Subject Access Rights including the
mandatory “right to be informed” and ensuring the lawfulbasis for processing;–– reporting and mitigating risks through the Company ERM
system.

Data privacy(individuals and their personal data)

Key issues under review include the transfer of data outside
Europe, the impact of Brexit and cyber security. See “– Corporate
Governance – 4.6 Risk Factors”.

(supply chains)

The transition to Decarbonisation-- Transition to decarbonisation--in 2020 and included the mapping of the product lifecycle
process and planning of initial integration of strengthened
human rights considerations into country guidance memos thatwill be part of the review process of the Company’s dealings
with sanctioned countries. Further actions will progress
throughout 2021.

Forced and child labour and labour rights(contractors and supply chains)-- Diverse and inclusive workplaces(Airbus workforce and contractors)

As part of the Company’s ambition to strengthen its human rights
due diligence, owners for each salient issue were identified,each of whom, taking into account stakeholder feedback, began
to develop action plans for each salient issue to include thescope, the current management arrangements and new actions
required as well as the identification of measures of effectiveness.
Risks related to these salient issues were embedded into theCompany’s risk portfolio in the frame of the Company’s ERM
system. This work will be further developed in 2021.

Impact of Products and Services on the Right
to Life and Liberty
Given the wide scope of this salient issue, which touches oneach Division, and feedback from external stakeholders, theCompany will focus attention in the first instance on its defence
portfolio where potential actions include the strengthening of
human rights considerations into the Company’s Defence andSpace Division product lifecycle. Initial work in this area started

This salient risk was initially “Impact of Climate Change”. Whilst theCompany understands the contribution aviation has on climatechange and the subsequent potential human rights impacts,
the focus of this issue has been amended following both internaland external stakeholder feedback and the Company’s ambition
to bring the first zero emission commercial aircraft to market
by 2035. For further information, see “– 6.1.2 Environment”.
The scope of this salient issue will therefore focus on the humanrights risks of sourcing and integrating new technology in thetransition to decarbonisation. Work on defining actions willcontinue in 2021.

Forced and Child Labour and Other Labour
RightsFollowing feedback from external stakeholders, and basedon the size and complexity of the Company’s supply chain,
this salient issue was expanded to include “other labour
rights” focused on the Company’s supply chain. Key actions
include reviewing its alert systems for human and labour rights,
extending the scope of supplier assessments including humanand labour rights and focusing on critical, rare earth and conflictmaterials. For further information, see “– 6.1.6 Responsible
Supply Chain”.

Airbus SE / Report of the Board of Directors 202075

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Diverse and Inclusive Workplace

Awareness RaisingThis salient issue is focused on the Company’s workforce andcontract workers. As well as prioritising inclusion as one of the
key commitments within the Company’s sustainability strategy,
actions being progressed in this area include eliminating barriers
to recruitment and talent development, focusing on inclusive
leadership and reinforcing business ownership and accountability
for Inclusion & Diversity (“I&D”). For further information, see“– 6.1.4(b) Inclusion & Diversity” in the next section.

During 2020, the Company continued to raise awareness ofhuman rights through communication, presentations and thepromotion of its dedicated training on human rights and modern
slavery which is available to all employees in four languages.
During 2020, 1,493 participants undertook this training (10,096
in total since its launch), which included information on how
to identify the signs of human rights abuse and what to do ifanybody has concerns. More in-depth training on human rights,
including for employees in high-risk areas, is currently underconsideration.

IV. Initiatives
Prioritising Respect for Human Rights‘Respect human rights’ was prioritised by the Company as oneof the four sustainability commitments agreed by the EC and the
ECSC at Board level during 2020. This also included agreementof an ambition for human rights: “to embed and advance humanrights throughout our business, operations and supply chain”.

Commitment to Respect Human Rights
Building on the human rights commitments and expectations thathave existed in various key documents for many years, including
within the Airbus International Framework Agreement, signed
in 2005, the Company’s Code of Conduct and the Company’s
Supplier Code of Conduct, during 2020, the Company started
work to map, consolidate, articulate and embed its commitments
to human rights standards and principles, as well as its
expectations in this respect, aligned to international human rights
standards and principles including the UN Guiding Principles
for Business and Human Rights, the ILO Core Conventions on
Labour Standards and the OECD Guidelines for Multinational
Enterprises. This work will continue in 2021.

Grievance and Remediation
During 2020, a number of actions were taken to further strengthen
human rights in the Company’s “SpeakUp”, investigation andremediation processes. These included reinforcing references tohuman rights within the Company’s OpenLine and investigation
policies and clarifying the internal reporting process for humanrights concerns.
If an allegation of human rights breach received from within
the Company or through its supply chain or other third party
business relationships is found to be substantiated, remedy
would be sought through a variety of mechanisms. If an alert
is received via its OpenLine reporting system, the Company
commits to acknowledge receipt of the report within two
business days. The Company has a global network of internal
investigators, tasked with investigating allegations, including
those relating to human rights such as forced or child labour,or labour rights and working conditions.
During 2021, the Company will continue to strengthen its
processes to monitor human rights alerts and resulting
investigations, and will undertake proactive communication onthese mechanisms to employees, suppliers and other third party
business relationships to raise awareness.
Five alleged cases of concern related to forced labour and labour
rights in the Company’s supply chain were identified during2020. These include alleged forced labour and labour rights
concerns in the sites of both tier one and lower tier suppliers.
Four of the cases are closed as either unsubstantiated or witha consequential action, whilst one alert is currently still underreview by the Procurement Responsibility & Sustainability team.
The Company will continue to investigate any new alerts during
2021.

76

Airbus SE / Report of the Board of Directors 2020

In addition, the Company made presentations to its social
partners, including the SEWC, to raise awareness of its humanrights ambition. There was a commitment from both sides tocontinue ongoing dialogue to embed and advance respect forhuman rights and the Company committed to provide an annual
update to the SEWC as part of its governance on human rights.

Collaboration
During 2020, the Company engaged with a number of external
stakeholders on human rights in order to advance the topic
through external collaboration. These included academics,
researchers, NGOs, officials and peers.
The Company is also a member of a number of industry tradeassociations which during 2020 held focused discussions on
progressing human rights within the aerospace and defence
industry. These include the BDSV (German Industry Associationfor Security and Defence), ASD (the Aerospace and Defence
Industries Association of Europe), GIFAS (French Aerospace
Industries Association) and ADS (UK Industry Association for
Aerospace, Defence, Security and Space).
The Company was also asked by the UK Ministry of Defence
to be the first of its suppliers to complete their Modern Slavery
Assessment Tool which the Company completed in January 2020
and will continue to update.
In August 2020, it was announced that a contract had been
awarded by the UK Space Agency to a consortium, led by the
University of Nottingham Rights Lab, including the Company’s
Defence and Space Division, on a project to support anti-trafficking
efforts in Uganda. The project, known as “Anti‑trafficking using
Satellite Technology for Uganda”s Sustainability’ (“ASTUS”),
will develop a stakeholder-informed Modern Anti-trafficking
Support System (“MASS”), underpinned by satellite imagery
and associated geospatial datasets provided by the Company,
with the aim of enhancing Uganda’s anti‑trafficking efforts
and progress towards SDG 8. The MASS aims to assist antitrafficking decision-making and response at scales never seen
before.

KPIs
The Company has identified a number of KPIs related to humanrights to measure the progress and effectiveness of its actions.
During the reporting period, the following KPIs and targets wereagreed:–– number of social assessments, including human andlabour rights, carried out on the Company’s sites, including
subsidiaries and affiliates against a target of four per year
(five onsite social assessments and two evidence based
self‑assessment questionnaires were carried out in 2020);–– number of alerts of human rights concerns, including labour
rights and forced labour received via OpenLine or other means(five alerts were received in 2020);–– percentage of investigations completed or in progress following
reports of concerns linked to human rights, including labour
rights and forced labour (100% are complete or in progress);6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information–– number of participants who have completed e-learning modules
on human rights and modern slavery (1,493 completed in 2020,
10,096 completed in total);–– percentage of assessments (including human rights) carried out
on identified high risk external suppliers (100% of assessments
carried out in 2020).
For specific activities related to the Company’s supply chain, see“– 6.1.6 Responsible Supply Chain”.

V. Future Outlook
During 2021, the Company will continue its focus on embedding
and advancing its commitment to respect human rights
throughout its business, operations and supply chain, including
through the Human Rights MFT. Specific ongoing actions include:–– formally articulating the Company’s commitments to humanrights principles and standards including the United Nations
Guiding Principles for Business and Human Rights, the OECD
Guidelines for multinational Enterprises and the ILO;–– embedding a process for due-diligence on human rights
and strengthened human rights commitments through theCompany’s business management system;–– prioritising actions based on the Company’s identified salient
human rights risks;–– strengthening processes to monitor human rights alerts andresulting investigations;–– progressing social assessments focused on human andlabour rights throughout the Company’s sites, subsidiaries
and affiliates;–– capacity building with key teams throughout the Company
through development of training, communication andawareness raising.

II. Governance
The I&D team is part of the “DEVELOP Leadership, Culture,
Inclusion and Diversity Center of Expertise” within the humanresources function and represents each of the Company’s
Divisions, with regional I&D focal points supporting theimplementation of the I&D strategy.
An I&D Advisory Board, chaired by the Chief Human Resource
Officer with representatives from the Executive Committee andother divisional and regional executives, meets quarterly andprovides top level oversight and input into the I&D strategy as
well as reviewing risks or issues raised, providing support on
new initiatives, processes or changes to policy and making
appropriate recommendations to the Executive Committee.
In addition, local I&D (including disability) steering committees,championed by senior leaders and executives in the regions,provide additional support to embed and advance the I&D
strategy and provide valuable local input into the I&D team andadvisory board. The steering committees are supported by a
network of diversity business champions.

III. Risk Management
Any identified risks related to I&D are recorded in the Company’s
ERM and appropriate action plans agreed. Progress is reviewed
quarterly.
In addition, any alerts related to I&D raised via the Company’s
SpeakUp mechanism, including its confidential OpenLine, areinvestigated in accordance with the Company’s investigation
process.

IV. Initiatives

During 2020, “Respect Human Rights and Foster Inclusion” wasprioritised as one of the four sustainability commitments. Thispriority reflects the focus the Company puts on I&D and the
140 nations and 20 different languages that it represents.

During 2020, the Company continued to focus its efforts toredress its gender balance, including the number of women in
management positions and an annual target of 33% of all new
recruits to be female (26% in 2020), including those entering
early in their careers, such as apprentices and graduates. Since
2017 there have been three women on the Board of Directors,
compared to zero in 2013, and two women on the Company’s
Executive Committee.

An I&D position statement outlines the Company’s commitments
to creating a safe and inclusive culture, including zero tolerance
to discrimination and harrasment, whilst the Company’s Codeof Conduct and Supplier Code of Conduct expresses the
expectations of both employees and suppliers in this respect.

At the end of 2020:–– 18% of the Company’s active workforce were women;–– 14% of management positions at the Company were held
by women;–– 26% of all new Company recruits were women.

In line with the Company’s values, a comprehensive I&D strategy
drives the Company’s approach to embedding I&D focusing on
intergenerational, ethnic, social and cultural diversity as well as
gender equality, LGBTQ, neurodiversity and disability-friendly
policies and hiring processes. The I&D strategy aims to ensurethat the Company:–– creates a safe environment and inclusive culture wherecollaboration, empowerment, continuous learning andaccountability are promoted and valued. The Company has
zero tolerance for harassment or discrimination of any kind;–– ensures the Company attracts, recruits, develops and retains
a large and diverse pool of talent. This talent is a reflection of
our customers and suppliers base as well as the communities
around us;–– develops a thriving work environment supported by its values
system, leadership model as well as a Code of Conduct
understood and practiced by all;–– champions long-term sustainable impact not only in theaviation sector but also in the communities we work in bybeing signatories to the SDGs.

The Company supports various national and international
initiatives such as International Women’s Day and since
2018 we have committed to the UN Women’s Empowerment
Principles aimed at empowering women to participate fullyin economic life. The Company has also led the “Women in
Aviation and Aerospace Charter” and has been instrumental
in the development of the “Women in Defence Charter”
which demonstrates the commitment of a growing number oforganisations across the industry to build a more balanced andfairer industry for women. In addition, the Company launched a“Management Basics Leadership Foundation Programme” toensure that inclusive leadership becomes the norm at all levels.

b. Inclusion & Diversity
I. Introduction

The Company is also accelerating change through its employeeled “Balance for Business” network, which has around 10,000
volunteer members worldwide. Initiatives run through thisnetwork include roadshows promoting employee-led initiatives
such as peer-to-peer mentoring, confidence building andencouraging employees to challenge stereotypes and build theircareers. The network also supports some outreach initiatives.

Airbus SE / Report of the Board of Directors 2020

77

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Other employee-led networks such as the Women Innovative
Network (“WiN”), the Airbus Africa Network, Spectrum,
Pride@Airbus, Generation-A, Seniors Talent and (Dis)Ability
ambassadors networks are key to raising awareness of I&D,
promoting inclusion, equal rights and increasing visibility.
Initiatives include mentoring, leadership development of underrepresented groups as well as conferences and discussions
open to all employees.
The annual Dis(A)bility Week campaign aims to raise awarenessof disability across the Company and worldwide. This includes
a series of workshops and awareness sessions on topics suchas unconscious bias and psychological disabilities. During 2020
more than 30,000 employees engaged in Dis(A)bility Week
activities worldwide, having doubled the participation ratecompared to the previous year.
Highlighting that being unique is valued and that difference iswelcome, the Company ran a self-declaration campaign during2020 to promote awareness of the importance of declaring adisability to the Company whilst communicating the benefitsof self-declaration for employees and the teams.
The Company also engaged in various social diversity
programmes during 2020 in partnership with a number ofdifferent associations to promote quality education andmentorship for young people from underprivileged areas. For
example, the Company participated in the “PAQTE” and “Plan
10,000” initiated in 2018 by the French government to encouragebusiness to get involved in helping everyone find their place insociety by, for example, recruiting from priority neighbourhoods,
promoting learning and responsible purchasing and creating alink between neighbourhoods and businesses.
During 2020, the Company disclosed its Gender Pay Gap as
required through both French and UK legislation and continues
to put measures in place to ensure gender pay parity worldwide.
Full details can be found on the Company’s website at:
h t t p s: // w w w. a i r b u s .c o m /c o m p a ny/s u s t a i n a b i l i t y/reporting-and-performance-data/document-centre.html.

V. Future Outlook
Priorities for 2021 include continuing the Company’s focus ongender parity. Other actions include:–– eliminating systemic barriers during talent recruitment,
development and management;–– agreeing targets for external recruitment of women, external
recruitment from non-EU countries and external recruitmentof people with disabilities;–– extending leadership development programmes to include a
focus on I&D and in particular on gender diversity;–– increasing awareness and training on inclusive leadershipand unconscious bias;–– leveraging and reinforcing business ownership andaccountability through the Company’s network of diversity
champions.

c. Labour Relations
I. Introduction
2020 has been an unprecedented year due to the COVID-19
crisis which has demonstrated the essential dimension
and contribution of having a proactive employee relations
strategy in the Company. Throughout the crisis, the Company
has undertaken numerous discussions, consultations andnegotiations with its social partners, sometimes on a daily basis,to adapt to the evolving situation resulting from both the healthand economic crisis. For further information, please refer to78

Airbus SE / Report of the Board of Directors 2020

“Notes to the IFRS Consolidated Financial Statements – Note 2:
Impact of the COVID-19 Pandemic, 2.4 Workforce adaptation”.
These various adaptation plans were carried out inline withthe common principles and standards of the International
Labour Organisation (ILO) convention, the OECD Guidelines
for Multinational Enterprises and the principles laid down by
the UN Global Compact.
Employee relations are underpinned by the Company
commitments made in the Company’s Code of Conduct andthe Airbus International Framework Agreement, signed in 2005.

II. GovernanceIn the International Framework Agreement (“IFA”), the Company
reaffirms its willingness to respect the regulation regarding
fundamental human rights, equal opportunities, free choice of
employment, as well as prohibition of child labour and respectand ensuring the conditions for social dialogue.
The Company in particular intends, via its agreements, torespect the disposition of the following ILO conventions:
numbers 111 (discrimination – employee and occupation),
100 (equal remuneration), 135 (workers’ representatives),
29 (forced labour), 105 (abolition of forced labour),182 (child labour), 138 (minimum age), 87 (freedom of
association and protection of the right to organise) and98 (right to organise and collective bargaining).
The head of each business is responsible for ensuring
compliance with these principles. The provisions of thisframework agreement define the Company’s standards to be
applied wherever the Company operates provided they are
not in contravention of local law, insofar as more favourable
conditions do not exist already. Dedicated processes ensurethat the provisions of this agreement are not breached wherever
the Company operates, insofar as more favourable conditions
do not exist already.
The Company is in continuous dialogue with social partners
on its sites in Europe, principally through meetings withmanagement at the European Committee level but also throughmeetings and negotiations at national or local level. Sites outside
Europe are covered by the Company’s ILA framing the social
dialogue and social culture in line with local labour legislation,
culture and practices of respective countries.
Regular social dialogue is ensured as per ILO requirements andlocal legislation thanks to the Company’s SEWC agreement in2015 and reshaped in 2018.
Labour relations and social dialogue are fully part of theCompany’s DNA and therefore, its continuous evolution
and improvement are embedded in the Company’s Human
Resources strategy supporting the Company’s businesschallenges. This has been particularly evident throughout 2020.
The close working relationship between the Company andemployee representatives has demonstrated the value of good
employee relations and the value of constructive social dialogue
to understand the challenges facing the Company, work throughresource adaptation plans and co-design solutions via collective
agreements.

III. Risk Management
The European labour relations of the four main countries of
the Company (France, Germany, UK, Spain) is also part of
the Company Risk Management processes and these risks
are reviewed internally on a regular basis. For example during2020 employee relations focused on ensuring legal complianceregarding national labour laws and immigration and the impact

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Informationof Brexit. The Company’s approach to risk management isalso reinforced by a whistle-blowers mechanism provided by
the OpenLine, which allows employees to report concerns
anonymously.

IV. Initiatives
During 2020, the main focus for the Company’s employee andlabour relations has been on adapting the business to the healthand economic crisis caused by COVID-19 and the preparationof an adaptation plan.
As part of the COVID-19 adaptation plan discussions, the SEWC
nominated independent external experts to analyse the social,economic and financial situation of the Company. This included
interviews with the Company’s top management which informed
a detailed report for the SEWC on the impact of COVID-19 on
the business and the actions the Company proposed to take.
In Europe, the Company’s social partners were also closely
involved in discussions on the health and safety measurestaken in the workplace to protect workers and prevent the
spread of COVID-19. This included the provision of personal
protection equipment (PPE), team rotations, homeworking,social distancing and regular communication particularly on
any special site measures.
COVID-19 adaptation plan discussions also resulted in thesignature of various collective agreements by the main unions
or staff body representatives in France, Germany, Spain andthe UK covering all employees in Airbus’ commercial aircraftbusiness within these countries. These discussions andagreements enabled dedicated partial unemployment schemes
to be implemented in order to adapt activities and the workforce
in 2020. In parallel, negotiations on resource adaptations alsoenabled mechanisms to be put in place to encourage, where
possible, voluntary departures whilst not ruling out the needfor compulsory redundancies.
These collective agreements were signed by employee
representatives and unions including: the KBR / GBR Konzern- /Gesamtbetriebsrat (social partners in all Divisions) in Germany;
the three main trade unions represented in the Company inFrance and three out of the five trade unions represented in
the Intercompany Committee in Spain. Unite the Union wereactively involved in adaptation measures in the UK.
The agreements provide for a range of social measures
including: working time adaptations, voluntary departureschemes, early retirement and the opportunity to pursue
personal or professional opportunities outside of the Company,
such as business creation.

During 2020, the Company also continued activities aimed atstrengthening collaborative and partnership approaches with
unions in various countries.
For example, in Canada, the Company has benefited from its
first year following the signature of the new collective agreementin Airbus Canada in Mirabel, which succeeded in creating atrue partnership with the Québec Association internationaledes machinistes et travailleurs de l’aéronautique (AIMTA).
The benefits of this partnership have been clearly evident
throughout the COVID-19 crisis where many urgent agreements
dealing with the situation were reached, ensuring the continuityof operations, despite severe restrictions imposed by the
Québec Government. In addition, as part of the acquisition in2020 of the Airbus A220 and A330 work package production
capability from Bombardier in Québec and the creation of Stelia
Aéronautique Saint Laurent Inc, a newly created subsidiaryof STELIA Aerospace, the Group has welcomed more than
300 new employees, 200 of which are members of the AIMTA.
The local AIMTA section held a general meeting and a poll,
which resulted in 97.8% of members voting in favour of thetransfer of their collective agreement to Stelia AéronautiqueSaint Laurent Inc.
In addition, the Company is a member of, and has participatedin various initiatives and events organised by the Global Dealfor Decent Work and Inclusive Growth initiative (Global Deal).
Developed in cooperation with the ILO and the OECD, theGlobal Deal is a multi-stakeholders’ partnership that seeks toaddress two of the greatest challenges of our time: to reducehigh and rising inequalities in opportunities and outcomes
and to restore fading trust in the ability of governments andinstitutions to make economic growth work for all against a
backdrop of rapid changes in the world of work.
During 2020, the Company introduced a new KPI measuring
the accident frequency rate as part of its executive and senior
manager variable pay and employee success sharing scheme.
This new approach has been validated and agreed at the SEWC
and demonstrates the shared willingness of the Company
and its social partners to introduce important non-financial
measures to assess the performance of the Company.

V. Future Outlook
The COVID-19 health and economic crisis will continue to be a key
area of focus during 2021 as the Company adapts to the falloutof the pandemic and ensures the successful implementation of
its adaptation plan. This will include continuing ongoing dialogue
with its social partners, including on organisational changes
and new ways of working.

Consultation and negotiations on adaptation measures havealso taken place in other regions with the recognised unions
and employee representatives. For example, in Africa and the
Middle East, successful negotiations and agreements related
to adaptation measures were signed in both Morocco andTunisia including a working time reduction arrangement; whilst
in Latin America, agreements were signed in Queretaro, Mexico,
covering headcount reduction, collective vacation and working
time reduction.

Airbus SE / Report of the Board of Directors 2020

79

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Informationd. Our Workforce
As of 31 December 2020, the Company’s workforce amounted to 131, 349 employees (compared to 134,931 employees in 2019),
95.58% of which consisted of full-time employees. These statistics take into account consolidation effects and perimeter changes
throughout 2020. Depending on country and hierarchy level, the average working time is between 35 and 40 hours per week.
The decrease in total headcount was the result of the COVID-19 adaptation plan in the Company’s commercial aircraft businessand the already planned restructuring of the Company’s Defence and Space Division with some additional adjustments to reflect
the impact of the crisis on some of its business lines.
Whilst the number of entries had significantly decreased following a decision to restrict new hires in all businesses impacted by
the crisis, the number of leavers had significantly increased as a result of the voluntary departures in the frame of collective agreements.
Despite the crisis, the Company fulfilled commitments towards candidates already selected prior to the crisis and welcomed
5,463 newcomers.
Entries & Leaves

2020

2019

2018

Newcomers

5,463

11,27010,959Core Division

2,413

6,643

5,246

Subsidiaries

3,050

4,627

5,713

Leavers (including partial retirement)

7,796

5,842

6,198

Core Division

4,675

2,902

3,245

Subsidiaries

3,121

2,940

2,953

In terms of nationalities, 35.7% of the Company’s employees are from France, 32.3% from Germany, 7.7% from the UK and 9.8%
from Spain. US nationals account for 2.1% of employees. The remaining 12.4% are employees coming from a total of 134 othercountries. In total, 89.9% of the Company’s active workforce is located in Europe on more than 100 sites. Furthermore, the Company
expects its workforce to evolve naturally to support the business.

Workforce by Business Segment and Geographic Area
The tables below provide a breakdown of the Company’s employees by business segment and geographic area, including
the percentage of part-time employees.
The workforce of the Company’s Helicopters Division remained stable in line with its business resilience during COVID-19 crisis, while
the adaptation plans in the Company’s commercial aircraft business and the Company’s Defence and Space Division had started
to materialise with significant decrease.
Employees by business segment
Airbus31 December 2020

31 December 201931 December 201880,92478,48780,985

Airbus Helicopters

20,02620,024

19,745

Airbus Defence and Space

32,83633,92233,002(1)

Airbus (former HQ)Group Total

0

0

0

131,349

134,931

133,671

31 December 2018

(1) Airbus includes population of Airbus Former HQ since 1 January 2018.

31 December 2020

31 December 2019

France48,23149,14348,144Germany

45,56845,63845,387

Employees by geographic area

Spain

11,828

12,637

13,684

UK

9,846

11,109

11,214

US

2,980

3,151

2,489

Other Countries

12,896

13,25312,753

Group Total

131,349

134,931

133,671

31 December 2020

31 December 201931 December 2018

4.42%

4.46%

4.22%

31 December 2020

31 December 201931 December 2018

128,151

130,591

130,131

3,198

4,340

3,540

% Part time employees
Group Total

Active Workforce by contract type
Unlimited contract
Limited contract > 3 months

Voluntary departures have triggered an increase in the Company´s attrition rate, which in 2020, is 5.8% overall (including subsidiaries)
and 9.4% in subsidiaries only.

80

Airbus SE / Report of the Board of Directors 2020

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

The Company’s headcount reporting includes all consolidated
companies worldwide. The internationally comparative figures
are based on the active workforce, i.e. the number of permanentand short-term employees, irrespective of their individual working
times. The headcount is calculated according to the consolidation
quota of the respective companies. The scope for HR structurereporting covers about 99.98% of the Company’s total active
workforce from consolidated companies. In total, about 0.02%
of the Company’s employees are not included in the scope, as
no detailed employee data is available at group level for somecompanies belonging to the Company, usually recently acquired.
For more details on Scope and Methodology, please refer to theCompany’s website at www.airbus.com.

Our People
The Company’s workforce is managed by the HR function
thanks to a set of HR policies and a strong labour structure.
HR policies are discussed and agreed with social partners
through continuous and regular meeting at global and local
levels. The current priorities of the Company’s HR function are:–– to ensure that the Company can attract, develop and retain
a world-class competent, motivated and flexible workforce,
which fits current and future business requirements;–– to facilitate diversit y, continuous integration andinternationalisation of the Company and contribute to acommon culture based on strong company values; and–– to be a global employer of choice and an innovative, inclusive
and engaging place to work for all employees.

Training & Mobility
COVID-19 has been destabilising and has had a significant impact on the Company’s learning activities, driven by the need to reduce
cash spend to secure the short-term survival of the Company. While the various restrictions and national lockdown measures have
limited the Company’s ability to deploy classroom sessions, the Company invested further in our digital learning platforms to increase
digital learning by 74% compared to 2019.
The measures taken to adapt our classroom training sessions to comply with the strictest health and safety measures ensured
the delivery of the mandatory and critical training without disruption to operations. The acceleration of our digital learning strategy
has allowed employees to remain active in their development during periods of remote working and partial unemployment (according
to social agreements).
In 2020, the Company provided more than 1 million training hours to employees.
2020 (1)2019(1)

2018(1)

Number of Classroom Training

78,443

129,296

114,327

Number of Digital Training

752,702433,338

248,448(1) Change of reporting period since 2018: from 1 October to 30 September.

The training KPIs in this report are provided for the legal entities in which at least one employee has followed a training during
the year. These entities’ headcount represents 97.6% of the total active workforce from full consolidated companies. Some entities
may monitor local trainings outside of the Group’s centralised training tool MyPULSE, the corresponding additional training is notincluded in the KPIs above.
In addition, in 2020 more than 33,500 employees benefitted from other leadership development and transformation solutions
proposed by the Airbus Leadership University – many of which were provided in a digital format given the challenging context of 2020.
The university continues to strengthen the Company’s approach to leadership, offering equivalent opportunities for all leaders todrive their development one step further, while accelerating the culture evolution and human transformation of the Company.
Mobility of employees within the Company’s commercial aircraft business and its two Divisions provides overall benefit and value
to the Company. In 2020, as of end of December, more than 7,000 employees have changed jobs through internal mobility.

6.1.5 Exemplify Business Integrity
Ethical Business Practices
I. Introduction
The Company’s Ethics & Compliance programme seeks to ensurethat the Company’s business practices conform to applicablelaws, regulations and ethical business principles, as well as
developing a culture of integrity and speak-up. In 2020, Ethics& Compliance continued to be a top priority for the Company as
for 2019 and 2018. In its list of priorities for the year, the Company
set the objective to: “Adapt our company and workforce to thecrisis in a responsible manner that upholds our Values, while
ensuring Health and Safety and reinforcing our commitment toEthics & Compliance”.

The Company has worked over the past several years todevelop an Ethics & Compliance programme that is structured
around the following key risk areas: Business Ethics / AntiCorruption Compliance, Export Compliance and Data Protection
Compliance. Each of these areas is, in turn, supported bydedicated compliance policies and a team responsible for theirimplementation, together with the identification and proposalof new measures to adapt to a constantly evolving regulatory
landscape.
Improving the Ethics & Compliance programme remains a
constant and ongoing process, in cooperation with otherfunctions within the Company, in order to sustain and capitaliseon our values.

Airbus SE / Report of the Board of Directors 2020

81

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

II. Governance
The Ethics & Compliance organisation is part of the Legal
Department under the ultimate responsibility of the Company’s
General Counsel. The aim is to provide strong governancethroughout the Company with the global presence of qualifiedcompliance officers who ensure the Ethics & Complianceprogramme is implemented consistently in the different functionaland operational areas.
The Company’s Chief Ethics & Compliance Officer, who reports toboth the General Counsel and the ECSC of the Board of Directors,
leads a dedicated team of Compliance professionals who areresponsible for supporting and advising across the Company oncompliance related topics, performing risk assessments, drafting
policies, conducting third party due diligence, investigatingcompliance allegations, implementing tools and controls anddelivering compliance training.
The ECSC also plays a key role in the oversight and continued
development of the Company’s Ethics & Compliance programme,organisation and framework for the effective governance of Ethics& Compliance.
In addition to the dedicated Compliance professionals,
the Company continued, in 2020, to expand its network ofpart‑time Ethics & Compliance Representatives (“ECRs”),
spanning all Divisions, functions, and regions. There were a totalof 335 ECRs at the end of 2020, representing a ratio of 1 ECR
per 390 employees. Although the ECR network members are
not compliance experts, they play an important role in promoting
the Ethics & Compliance programme and culture and serve as
points of contact for any employee who has questions about the
Ethics & Compliance programme or wishes to raise an Ethics& Compliance concern, including but not limited to bribery or
corruption.
Likewise, the network of Data Privacy Focal Points in the business(functions and affiliates) grew considerably in 2020 to around380. The Data Privacy Office (“DPO”) comprises a dedicatedteam of privacy experts, consisting of divisional and country Data
Protection Officers in the EU and appointments in the regions(USA, China and Singapore), responsible for privacy compliancewithin their perimeters. To further deploy the Company’s Privacy
Programme throughout the business and affiliates, the DPO andData Protection Directive mandate that Data Privacy Focal Points
are nominated in the functions and affiliates of the Company.
The DPO trains, provides methodologies to and coordinates theData Privacy network.

III. Risk management, monitoring and controls
The Company is required to comply with numerous laws andregulations in jurisdictions around the world where it conducts
business. This includes countries perceived as presenting an
increased risk of corruption.
Accordingly, since 2017, the Company has been conducting
a thorough bribery and corruption risk assessment acrossits two Divisions and different businesses. The results of thisrisk assessment are embedded and monitored within the
Company’s ERM framework and highlight, among others, therisk of improper payments being made to or via third parties
such as sales intermediaries, lobbyists and special advisors,
suppliers, distributors and joint venture or offset partners. Further
corruption risks include the use of sponsorships, donations, or
political contributions to improperly benefit decision-makers, orthe provision of excessive or overly frequent gifts and hospitality
by Airbus employees.
In order to ensure its compliance with Export Control regulations
and laws in the EU, US and internationally, the Company continues
to review its Export Control compliance programme to ensure it is82

Airbus SE / Report of the Board of Directors 2020

fit for purpose. Where risks are identified, they are embedded andmonitored in the Company’s ERM. Identified risks include potential
unauthorised access to export controlled data and hardware by
third parties and non-compliance with the International Trafficin Arms Regulations (“ITAR”). Regarding Data Privacy, theCompany systematically undertakes Privacy Impact Assessment
for applications meeting the criteria (nature of the personal dataprocessed or scale of the processing, etc.) as defined by theGeneral Data Protection Regulation (“GDPR”). In addition, risks
derived from GDPR are also assessed in the context of the ERM
and kept updated.
Specific directives have been adopted to address the Company’s
key compliance risk areas. These include among others:–– Requirements for Gifts & Hospitality;–– Requirements for Sponsorships, Donations and Corporate
Memberships;–– Requirements for the Prevention of Corruption in the
Engagement of Sales Intermediaries;–– Requirements for the Prevention of Corruption in the
Engagement of Lobbyists & Special Advisors;–– Requirements for Supplier Compliance Review;–– Requirements for Preventing and Declaring Conflicts of Interest;–– Requirements for the Prevention of Corruption related toMergers & Acquisitions, Joint Ventures, Partnerships andsimilar Transactions;–– Method for the Prevention of Corruption in the Context ofInternational Cooperation & Offset Activities;–– Requirements for Anti-Money Laundering / Know your
Customer;–– Requirements for Export Control Sanctions, Embargoes
and Screening;–– Requirements for Export Control Framework;–– Requirements for Export Control Escalation and Voluntary
Disclosure;–– Requirements for Export Control Brokering;–– Requirements for Export Control Classification;–– Requirements for Export Control Licences and Agreements;–– Requirements for ITAR Part 130 Reporting;–– Data Protection Directive, Method and Binding Corporate Rules.
The Ethics & Compliance organisation is charged with oversightand monitoring of these directives to ensure that they are being
implemented effectively. Periodic controls on key processes are
performed and reports provided to the Company’s Executive
Committee and the ECSC, including recommendations tostrengthen the Ethics & Compliance programme where necessary.
In addition, the Corporate Audit & Forensic Department conducts
periodic, independent audits of the Company’s compliance
processes to assess the effectiveness of internal controls andprocedures and allow the Company to develop action plans forstrengthening such controls.

IV. Initiatives
Awareness and Training
All Company employees are required to undergo a minimum
amount of compliance training via e-learning. Additionally,
depending on the function, the country and the level of risk
implied by their role, certain employees are selected to attend
live classroom training as well. Attendance in such cases ismandatory, and managers have a responsibility to ensure that
their team members do so.
From 1 October 2019 to 30 September 2020, the Company’s
employees followed 309,682 Ethics & Compliance e-learning
sessions, including on bribery, corruption and export control.
Furthermore, 3,501 employees attended live classroom training on
different E&C topics in 2020, the majority of which were deliveredin virtual classroom settings due to the pandemic.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Likewise the Company also delivered anti-bribery and corruption
training towards higher risk third parties, including sales
intermediaries, lobbyists and special advisors. In 2020, 80%
higher risk third parties were trained on E&C requirements andexpectations.
The Company continued the roll out of the data protection
e-learning as part of the E&C compulsory training catalogue.
Approximately 30,000 employees completed this training in 2020.

Speak-Up Channel: OpenLine
The Company recognises that the Code of Conduct cannot
address every challenging situation that may arise, andtherefore encourages its employees to speak-up throughvarious channels, including through OpenLine (available athttps://‌w ww.‌a irbusopenline.com). The OpenLine enables
users to submit an alert securely and confidentially, and also to
ask questions related to Ethics & Compliance.
In 2020, Inclusion & Diversity was expressly added to the definitionof the “Human Resources” topic. Product Safety, previously
covered by a broader “Procurement and Product Security” topic,
is now displayed as a separate category as well.
In addition, the dataprotection@airbus.com mailbox is systema­tically published in the Company’s data protection policies andinformation notices specific to the various apps, for the purpose of
exercising data subject’s rights and/or lodging complaints.
The Company protects those who speak up and raise concerns
appropriately and in good faith. The Company does not retaliate
against anyone who raises a concern, or against those who assist
in investigations of suspected violations.

Policies and Procedures
In 2020, the Company updated its anti-bribery and corruption
policies related to Sales Intermediaries (Business Partners)
and Mergers & Acquisitions, Joint Ventures, and Partnerships,
in particular to extend the scope of coverage to teaming andcooperation agreements, and other forms of non-monetary
partnership. The Company also issued new ethical guidelines
related to (i) competitive intelligence gathering and (ii) resistingsolicitation and extortion. All policies and guidelines are madeavailable to employees on the Intranet, and classroom training
is delivered to employees who are particularly exposed to theunderlying risks as described above.
On the Export Control side, the Company restructured
its programme and issued the following new directives:(i) Requirements for Export Control Sanctions, Embargoes
and Screening; (ii) Requirements for Expor t Control
Framework; (iii) Requirements for Export Control Escalation
and Voluntary Disclosure; (iv) Requirements for Export Control
Brokering; (v) Requirements for Export Control Classification;(vi) Requirements for Export Control Licences and Agreementsand (vii) Requirements for ITAR Part 130 Reporting.
Under the terms of the Consent Agreement with the US DoS
made public on 31 January 2020, the DoS has agreed to settle
all civil violations of the ITAR outlined in the Company’s voluntary
disclosures identified in the Consent Agreement, and the Company
has agreed to retain an independent export control complianceofficer, who will monitor the effectiveness of the Company’s export
control systems and its compliance with the ITAR for a duration of
three years. Please refer to the “Notes to the IFRS Consolidated
Financial Statements – Note 39: Litigation & Claims” (Investigationby the UK, France’s PNF, US Departments of State and Justiceand Related Commercial Litigation).

V. Future Outlook
An effective Ethics & Compliance programme is one that, bydefinition, continuously adapts to changes and improves overtime. Going forward, the Company will continue to assess its risks
and monitor and test the implementation of mitigation measuresat all levels: corporate level, Divisions, regions and local entities.
When misconduct reveals a gap in compliance policies,
procedures or tools, the Company undertakes revisions to
its Ethics & Compliance programme commensurate with thewrongdoing and in light of lessons learned. While complianceat the Company will therefore always be a work in progress, theCompany is committed to this endeavour, as it aims to make its
Ethics & Compliance programme sustainable over time.

6.1.6 Responsible Supply Chain
I. Introduction
At the end of 2020, approximately 23,000 suppliers from more than 100 countries supply parts, components, systems and services
to the Company. In 2019, the overall external sourcing volume of the Company was valued at around € 53 billion and shared between
Divisions with 84% for the Company’s commercial aircraft business, 10% for the Company’s Defence and Space Division and
6% for the Company’s Helicopters Division.

Defence ans Space
5,453 M€
10%
6%

Commercial
Aircraft
44,623 M€

Helicopters
3,324 M€

53,400
M€
84%

Source: Procurement Performance & Reporting Services; Airbus Sourcing Report 2020.

Airbus SE / Report of the Board of Directors 2020

83

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Whilst the Company’s products and services are sold all over the world, the majority of its supply chain is based in Europe andOECD countries. However, in the past few years, the supply chain has become concentrated and more international. The Company
has identified local sourcing in Asia as one of its leading long-term objectives. In addition, and due to increasing consolidation within
the aerospace and defence sector, larger work packages are being placed with a smaller number of lead suppliers.
The Company’s global sourcing footprint is represented as follows based on Tier 1 and subtiers data:

59%
in Europe27%
in NorthAmerica8%in AsiaPacific<1%in Africa<1%
in Middle East

<1%
in SouthAmerica<1%
in Oceania
To promote further globalisation of its sourcing footprint, theCompany has established regional sourcing offices in North
America, China & East Asia and India.
For the sourcing of indirect goods and services, the Airbus General
Procurement function is represented in the regional sourcing
offices. Throughout China, India and North America, Airbus
General Procurement has over 50 employees managing “Local
for Local” activities across 18 sites. Airbus General Procurement
continued to grow the global footprint by implementing new
developments within Asia Pacific (Singapore and Malaysia) andthe Middle East throughout 2020.
As the Company’s commercial aircraft business and its two
Divisions are certified ISO14001, the Procurement function acts
in adherence with ISO 14001 requirements.

II. Governance
Responsible Sourcing and Supplier Management
The Company strives to make environmental and societal
responsibility a core element of its procurement process,managing the relationships with suppliers through sourcing
strategy, supplier selection, contract management, suppliermonitoring and development.
The Company’s suppliers must comply with all applicable laws
and regulations. In addition, all business should be conductedby suppliers in compliance with the principles of the Company’s
Supplier Code of Conduct.
The Company’s Supplier Code of Conduct is the document ofreference for the Company’s responsible supplier management(available at https://www.airbus.com/content /dam/
corporate-topics/corporate-social-responsibility/ethicsa nd - complia nce /S upplie r- Code - Conduc t- E N .pdf ).
This Supplier Code of Conduct represents the Group-wide values
and principles in line with internationally recognised standards
and conventions (such as OECD and ILO).

84

Airbus SE / Report of the Board of Directors 2020

In 2020, in order to further embed sustainability activities
throughout its supply chain, the Company formalised a Sustainable
Supply Chain Roadmap (“SSCR”). This multifunctional andmultidivisional team has responsibility for leading and monitoring
progress around the implementation of the four commitmentsof the Company’s sustainabililty strategy throughout theCompany’s supply chain. This includes environment, humanrights and inclusion, safety (including product safety and healthand safety and quality) and business ethics. The SSCR reports
into a steering committee chaired by the Head of Sustainability& Environment and the Head of Procurement Responsibility& Sustainability and includes the representative of the Chief
Procurement Officer of the Company and the Chief Procurement
Officer of its two Divisions as well as the Head of Health & Safety,
the Head of Product Safety and the Head of Ethics & Compliance,or their nominated representatives. The EVP Communication
and Corporate Affairs and the Chief Procurement Officer of theCompany act as sponsors of the SSCR. In addition, the Head ofProcurement Responsibility & Sustainability department is partof the Procurement Leadership Team (PLT) and is responsible forfacilitating the exchange of feedback on sustainability activities
between the SSCR and the PLT on a regular basis.
All sustainability activities in the supply chain are based on thefollowing key elements and principles of due diligence following
the Organisation for Economic Co-operation and Development(“OECD”) Due Diligence Guidance for Responsible BusinessConduct:–– supply base risk mapping;–– supplier engagement and contractual requirements;–– supplier assessment/audits and development plans;–– policies, tools and reporting.
For anti-corruption topics in the supply chain, the Procurement
department cooperates closely with the Legal & Compliancedepartment.

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

III. Risk Management

1. Supply Base Risk Mapping

The Company’s direct procurement-related risks are embedded
into the Company’s ERM system. A specific risk category
regarding sustainability-related risks in the supply chain has
been integrated into the risk management plan.

Social Compliance Risksa) Regulatory Non-Compliance
The Company may not receive sufficient visibility and informationfrom its supply chain in regards to compliance with environmental,
human rights, health and safety laws and regulations.
In the event of an industrial accident or other serious incident
in the supply chain, or any problems of the supplier to fulfil its
operational or product compliance, this may also have a significant
adverse effect on the reputation of the Company and its products
and services. The Company’s reputation may also be affectedby the public perception of social and/or environmental impacts
of its supply chain’s industrial operations on local environments,
communities, biodiversity and the general public’s health.

b) Supplier’s Impact on Local Environment
From the extraction of raw materials to the manufacturing of parts
delivered to the Company, a supplier’s industrial operations may
have significant environmental impacts on the local environment
where the activity is performed, with possible impacts on air,water, soil, biodiversity, workers’ occupational health and safety
and on the health of the general public.

c) Disruption Risk
In the event that a supplier fails to comply with environmental,
human rights, health and safety laws and regulations, even if
caused by factors beyond its control, that failure may result in thelevying of civil or criminal penalties and fines against the supplier.
Regulatory authorities may require them to conduct investigations
and undertake remedial activities, curtail operations or close
installations or facilities temporarily to prevent imminent risks.
In response to the above a) to c), the Company deploys
responsible sourcing activities and specific supplier due diligence
actions in the frame of the SSCR.

d) Risk of Product Non-Compliance
The various products manufactured and sold by suppliers mustcomply with applicable environmental, human rights, healthand safety laws and regulations, for example those covering
substances and product composition. Even if a supplier seeks
to ensure that its products meet the highest quality standards,
increasingly stringent and complex laws and regulations, newscientific discoveries, delivery of defective products or the
obligation to notify or provide regulatory authorities or others withrequired information (such as under the REACH regulation) may
force it to adapt, redesign, redevelop, recertify and/or remove
its products from the market. Seizures of defective products
may be pronounced that could prevent delivery to the Company.
In response, a Procurement Task Force has been establishedin order to ensure a group-wide governance for suppliermanagement and assessment of chemical regulations andobsolescence impact.

IV. Initiatives: Airbus Supplier Vigilance Plan
The Company requires commitment to responsible businesspractices and sustainable development from all suppliers andstrives to make environmental and social responsibility a coreelement of its sourcing and supplier management process.
This joint commitment is a key element in securing success,conformance to applicable laws and a sustainable future for theaviation industry. For the Company’s Vigilance Plan for its own
operations, see “– 6.1 Non-Financial Information – 6.1.1 Airbus’
Approach to Sustainability”.

Since 2018, the Procurement Responsibility & Sustainability
department has carried out proactive social risk mapping in linewith international guidance, internal commodity expertise andexternally available country indices. The risk mapping includes
risks from both a country and a purchasing category perspective
considering indices such as child labour, modern slavery/forced
labour, recruitment practices, working time, wages, people
safety at work and freedom of association. In 2019, this social
risk mapping methodology was formalised and publishedin an internal commodity guide applicable to the Company’scommercial aircraft business and its two Divisions.

Environmental Compliance Risks
In addition, the Company has carried out environmental risk
mapping, taking into consideration categories such as theexistence of hazardous substances, energy consumption, CO2
emissions, water usage, waste management, air pollution andspecific local Chinese environmental regulations. In 2020, thisenvironmental risk mapping methodology was included in theinternal commodity guide (see previous section).

Number of Business-Relevant External Risk Suppliers
Identified in 2019 (Thereof Lower Tiers)
Based on the Company’s 2018 Sourcing Report and following
application of the risk mapping methodology (described inprevious section), 412 suppliers were identified as high risk in 2019.
However, taking into account the number of suppliers who hadfinished or are decreasing activities with the Company during
this time, the number of business-relevant high risk suppliers
wasreduced to 397 in 2020.

Supplier Factory Visits
In 2019, the Company introduced “the Gemba Walk” pocketbook,applicable to commercial aircraft activities, which is a practicaland visual guide for the Company’s employees when visiting theshop floor of a supplier, supporting the identification and reportingof risks or improvement opportunities observed during factory
visits. A dedicated pocketbook covering environment, health &safety and human rights risks was also developed in 2019 andpublished on the Airbus intranet. Unfortunately, restrictions put
in place during 2020 due to COVID-19 significantly reduced theeffectiveness of identifying risks through supplier shop floor visits.

2. Supplier Assessment / Audit and Development
Since 2019, the Company has worked with external expert
companies to conduct sustainability-related, evidencebased desktop assessments and specific on-site audits. The
assessments cover social compliance criteria such as humanrights, labour practices, health and safety and anti-corruption as
well as environmental regulations and sustainability criteria basedon an environmental questionnaire developed by IAEG. During
2020, all suppliers identified as high risk following application of
the Company’s risk mapping methodology in 2019 were required
to undertake an evidence based desktop assessment. 50% of all
those planned have been completed, whilst the remaining are in
progress. The results from the assessments are being analysed
and the Company is establishing a governance process to follow
up on the findings.
Specifically on environmental matters, the Company further
fostered REACH awareness in the supply chain and engaged
with suppliers to accelerate the substitution and manage the useof the most hazardous substances. In particular, regarding the
REACH EHS readiness of suppliers, the Company focused on:–– engagement with 236 in situ suppliers through webinars andsupplier conferences to develop their readiness to comply
with enhanced REACH EHS conditions when working on the

Airbus SE / Report of the Board of Directors 202085

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

Company’s sites. Further direct exchanges with the Company’s
EHS experts has been organised with 26% of them;–– evaluation of the maturity of external suppliers in the Company
qualified processes in regards to the future enhanced
protection requirements that are being defined by the European
Commission:–– out of 357 suppliers of the Company qualified processes
using chromates in industrial operations, the 80 mostimpacting suppliers have been assessed on-site by a third
party on behalf of the Company,–– in 2020, the Company engaged with those suppliers, which
revealed findings and requested them to demonstrate andlaunch action plans for improvement. By end of 2020, thesuppliers have successfully closed approximately 80% of
the major findings,–– a complementary “wave 2” of supplier assessment
considering 18 suppliers group wide was initiated in
November 2020. This wave of assessments will start with
supplier visits in December 2020 and the gap closure andrecovery gap coverage should occur in 2021.

3. Supplier Engagement
Contractual Requirements
The Company’s standard procurement contract templates have
evolved over the last few years to reinforce clauses relating tosustainability and environment that require suppliers to:–– comply with all applicable laws and regulations relating to
production, products and services;–– provide information on substances used in manufacturing
processes and contained in the product itself;–– provide information on environmental, health and safety
matters such as safe usage and management of products
across its lifecycle (including waste management);–– implement an Environmental Management System based on
ISO 14001 or equivalent;–– comply with the Company’s anti-corruption and bribery
requirements; and–– comply with the principles of the Company’s Supplier Code of
Conduct, including with regard to environment, human rights,
labour practices, responsible sourcing of minerals and anticorruption.
In addition, in 2020, the Company’s Defence and Space Division
implemented criteria on sustainability and environment in thecall-for-tender procurement process. Only those suppliers whichmeet criteria, including in particular agreement to comply with
the Company’s Supplier Code of Conduct, can continue withthe call for tender procurement process. Positive answers toadditional criteria, such as commitment to the SDGs, sustainableprojects, life-cycle assessment, waste and packaging reduction,
will prioritise suppliers for further selection. Consideration will
be given during 2021 to extend this process throughout theCompany.
In 2019, the full scope of clauses relating to sustainability
and environment criteria were included in new contracts andimplementation into existing contracts has started according
to the contractual roadmap of each purchasing commodity.
During 2020, following a review of processes to make them more
efficient, the process to obtain from the Company’s suppliers acommitment to apply the principles of the Company’s Supplier
Code of Conduct was reviewed. A target to reach 80% of theCompany’s sourcing volume committing to apply its principles
by 2022 was approved.
In 2020, the physical Annual Supplier Conference for theCompany’s commercial aircraft business was cancelled due to
COVID-19. However, discussions with suppliers on sustainability
continued during various supplier meetings or virtual supplierconferences for specific commodities.

86

Airbus SE / Report of the Board of Directors 2020

4. Training & AwarenessThroughout 2020, the Procurement Responsibility & Sustainability
department supported both internal awareness sessions andworkshops as well as external supplier meetings on sustainability
topics in the supply chain. The Company’s internal Procurement
Academy provides training on core competencies and skills
to develop procurement expertise and prepare employees
within the Procurement department for the challenges of the
future. Sustainability modules are embedded in Procurement’s
newcomer induction path and manager development programme.
This training targets supply chain quality managers, ordering
officers and buyers. At the Company’s Defence and Space
Division, Procurement colleagues received mandatory training
in sustainability throughout 2020.

5. Policies & Tools
The Company is currently assessing all Procurement processes
and tools in order to integrate sustainability-related requirements,
where relevant, on top of environmental requirements, which are
already largely considered. This will lead over the next years to
the adaptation of the Procurement processes and tools managed
by the Procurement strategy teams and creation of specificguidelines and/or commodity awareness.

6. Grievance Mechanism
From 2019, the Company OpenLine has been accessible toexternal stakeholders, such as suppliers and their employees,
as a secure and confidential channel through which they may,on a voluntary basis, raise alerts related to the Company inthe areas of bribery, human rights, environment and healthand safety. This medium is available through the Company’s
OpenLine website (www.airbusopenline.com) in 13 languages.
For further information on OpenLine, see “– 6.1.5 Ethical Business
Practices”. In addition to OpenLine, the Company’s Sustainable
Supply Chain Roadmap may receive alerts from other sources
including through the supplier onboarding process, media or
directly from employees.
During 2020, the Sustainable Supply Chain Roadmap received
alerts on five potential allegations relating to forced labour or
labour rights in its supply chain. Analysis and/or investigationsof those alerts have been completed or are in progress.

7. Work with External Stakeholders
As mentioned under “Environment” in section 6.1.2, the Company
is a founding member of IAEG, which is working on common
aerospace industry standards and tools to manage environmental
obligations.
More specifically, for the supply chain, IAEG has developed:–– a supply chain environmental survey, which the Company
implemented in 2019 and which will be used as the environmental
assessment module as mentioned in paragraph 2 above;–– an EMS implementation guideline to encourage a wider up-takeof EMSs as appropriate for each supplier in a phased approachand cost effective, consistent and supportive manner;–– the definition of an Environmental Qualification Program toassess and develop the environmental maturity of suppliers.
IAEG is currently reviewing the opportunity to extend thisqualification programme for the other sustainability topics.
As a co-founder of the International Forum on Business EthicalConduct (IFBEC), the Company is supporting the application of
global standards for business ethics and compliance. IFBEC
members have established a Model Supplier Code of Conduct
which expresses the minimum ethical standards to be appliedby suppliers throughout the aerospace and defence industries.
It also encourages suppliers to go beyond legal compliance,
drawing upon internationally recognised standards in order toadvance in social and environmental responsibility and business6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information

ethics. During 2020, the Company worked with IFBEC to update
and strengthen the IFBEC Model Supplier Code of Conduct,
which was re-issued in November 2020. The update included
strengthened requirements around a number of topics including
human rights, product safety and environment.
–– In addition, the Company added reinforced expectations into
its own revised Supplier Code of Conduct, including: Productsafety;–– Working hours and migrant workers aligned with ILO
conventions;–– Environment, to specifically account for the Company’senvironmental policies on substance management andproduct performance accounting for a life-cycle perspective.
–– Strengthened communication on the Company’s reporting
mechanism, OpenLine.
All suppliers will now be asked to sign a confirmation ofcompliance with the principles of the revised Supplier Code of
Conduct (or to confirm their own practices are aligned with theprinciples set out in this code), and to cascade these principles
throughout their own supply chains.
The Company is committed to support suppliers, where
necessary, to improve their own human rights due diligence.
In October 2019, the Company joined the Responsible Business
Alliance’s Responsible Mineral Initiative (RMI), in order to further
enforce activities of responsible sourcing while applying industry
standards for supplier due diligence and data management inaccordance with the OECD framework.

8. Promoting Disability Friendly Companies
Since 2011, in France the Company has been promoting
employment of disabled people by its suppliers. This
includes a request for relevant bidding suppliers to propose apartnership with a disability friendly company during the callfor tender process. In 2019, the global volume of businesswith disability friendly companies in France was more than
€ 50 million – a number that has been multiplied by six for thelast eight years. At the end of 2020, around 60 disability friendly
companies are working with the Company compared to 10
in 2010. In November 2019, the Company organised its first(Dis)Ability Forum in Hamburg to increase its cooperation withdisability friendly companies in Germany. In addition, the first(Dis)Ability Forum in Spain is planned for 2021. During 2020,
the Company’s subcontracting activities have decreased due tothe COVID-19 crisis. This decrease also affected disability friendly
companies. The Company regards disability friendly companies
as particularly fragile and is committed to support them to getthrough the economic crisis.

9. Conflict Minerals
The Company places great importance on the responsible
sourcing of materials used in manufacturing. Some minerals
including 3TG (tin, tungsten, tantalum and gold) arenecessary for the proper functioning of components within
its products. The Company largely does not directly importminerals but these minerals are found in certain products
the Company procures. In that context, the Company
requires from all suppliers to comply with applicable laws
and regulations on conflict minerals, including 3TG. To outline
the Company’s commitment to responsible business,
the Responsible Mineral Policy was released in 2019 (available athttps://www.airbus.com/company/sustainability/humanrights.html), which details its engagement to improve safety andhuman rights conditions in the mineral supply chains.
The Company is also monitoring developments from the European
Commission on critical raw materials (CRM) and is investigating
the possibilities to take a deeper look at its related supply chain,thought direct involvement and/or trade associations. The updateof the Supplier Code of Conduct (available from Q1 2021) will
also require suppliers to pay more attention to CRM responsible
sourcing.
For the small portion of direct procurement of minerals in the
Company’s Defence and Space Division, the Company has
established a dedicated Conflict Mineral Management System
which describes the necessary activities needed to monitor
potential future legal obligations linked to the upcoming EU
regulations on the importation of 3TG.

10. Plastic-Free Supply Chain
Based on the SDGs, specifically SDG 12 (responsible
consumption & production), a plastic-free supply chain project
was launched in 2019 within the Company’s Defence and Space
Division with the aim of reducing, reusing and recycling plastic
waste and packaging in the Division’s scope of involvement by
2025 (for example, production/maintenance, logistics, offices andsupply). Optimised processes are already in place and alternative
packaging is being used at some locations. During a pilot casefor the Division’s Labege site in France, plastic-free packaging
alternatives to replace transparent plastic film, plastic sleeves andadhesive tape were successfully implemented from June 2020.
From this project alone, annual savings of plastic packaging
corresponding to more than 200kg, equivalent to more than
14,000m2 of plastic film, has been achieved. Discussions are also
ongoing with suppliers to reduce plastic used in shipments andcontractual requirements of packaging are reviewed in order tomake the change from the current take-make-waste extractive
industrial model to a circular economy approach towards asustainable way to use plastic. Discussions to extend this projectto the Company’s commercial aircraft activites and the Airbus
Helicopters Division and to widen the scope started in 2019 andcontinued during 2020.

11. CO2 Emissions
During 2020, the Company engaged with its top suppliers
to engage in the Carbon Disclosure Project (CDP) supplier
programme. 95 of the Company’s top suppliers, covering 67%
of the Company’s sourcing volume, have been contacted and47 suppliers have completed the CDP questionnaire.
The results from this questionnaire will allow the Company toidentify supplier strengths and potential areas of improvement
and to engage with non-responsive suppliers in order to improve
the response rate in 2021.
Around 75% of responsive suppliers have set emission targets
and make use of Renewable Electricity or Renewable Energy
to achieve those targets, integrating into their strategy a Risk
and Opportunity approach from a climate change perspective.
In 2021 the Company intends to invite additional suppliers tocontribute to the CDP and hopes that those who were not able torespond due to the COVID-19 situation will be in a better position
to do so during 2021.

V. Future Outlook
The Sustainability Supply Chain Roadmap will evolve to actively
mitigate sustainability risks in the supply chain, adapt to evolving
sustainability requirements and support the Company’s ambition
to be more sustainable. Actions to be progressed during 2021
include:–– development and publication of a comprehensive picture of theCompany’s ambition towards its suppliers including monitoring
progress;–– formalisation and reinforcement of the process to collect alerts
relating to sustainability and environment topics from within
the Company’s supply base;Airbus SE / Report of the Board of Directors 2020

87

6. Non-Financial Information and other Corporate Activities /6.1 Non-Financial Information–– reinforcing the adherence of the Company’s Supplier Code of
Conduct principles throughout the Company’s supply base;–– extending the scope of supplier R&S assessments;–– engaging with those suppliers identified as requiring further
action based on completed supplier assessments anddevelopment of action plans when required;–– further integrating sustainability elements into procurement
processes;–– developing specific training modules on Sustainability &Environment and other solutions to support internal awarenessin purchasing commodities. This will include awareness on
the new Company’s Supplier Code of Conduct, and theCompany’s approach towards sustainability within its supply
base;–– the launch of a pilot project to further enhance the collectionof digital data from suppliers on conflict minerals, criticalmaterial and regulated substances in the Company’s delivered
products.
Regarding environmental sustainability and substancemanagement, the Company will focus on the following in 2021:–– completing the onsite assessment for REACH EHS assessment
for additional suppliers and monitoring their mitigation action
plan to close the findings;–– engaging with the key contributors to CO2 emissions in the
supply chain and further development in supplier dialogue,
through the CDP, to evaluate opportunities for GHG emission
reduction and suppliers’ maturity to address the climatechange challenges;–– cooperating with suppliers of equipment representative ofaerospace products to better assess the environmental impact
of Company products and embodiment of Ecodesign and
LCA approaches in the Company’s DDMS, engaging suppliers
to innovate for future products accounting for their life cycle
perspective.

6.1.7 Community Engagement
The situation in 2020 as a result of the COVID-19 crisis meant that
we had to adapt, but this adaptation does not mean that we stop
our responsibility as a company to be a force for positive social
impact. In fact, now more than ever, communities around theworld need companies like the Company to help in their recovery.
When the crisis hit, the Company and its employees aroundthe world offered to help, ranging from industrial solutions, tooffering air transportation of essential medical supplies to local
volunteering.
With air traffic grounded around the world, and Europe facing asevere shortage of PPE across several countries, the Company
used its test aircraft to transport over 36 million face masks from
China to Europe. Some face masks were used to safeguard
employees on Airbus sites and the majority were donated toEuropean governments for onward distribution to frontline healthservices.
On several Airbus sites, assembly lines were transformed into
production lines to manufacture essential PPE. The awardwinning Ventilator Challenge UK programme, in which
Airbus in Broughton played a major role, brought together a
33-strong consortium of engineering businesses from acrossthe aerospace, automotive and medical sectors to build an
incredible 13,437 Penlon ventilators for the NHS. The consortium
produced 20 years’ worth of ventilators in just 12 weeks and peak
production exceeded400 devices a day.

88

Airbus SE / Report of the Board of Directors 2020

3D printing also became a vital component in the global response
and the Company put its 3D printers to use producing a rangeof potentially life saving equipment. Airbus plants in Spain(Getafe, Illescas, Albacete, Tablada and San Pablo) joined forces
to produce 3D-printed protective face shields for healthcare
workers. Airbus Protospace in Germany and the Composite
Technologie Centre (CTC) in Stade, together with the 3D-printing
network in Germany “Medical goes Additive”, and a wider groupof German companies and institutions also supported the project
to print and deliver visors to regions in Spain which were lacking
PPE. Airbus teams in the USA worked with local businesses(Wichita) to consolidate the final assembly of donated parts, andthe site in Mobile teamed up with the University of South Alabama
to produce 3D-printed, reusable face masks and mask tension
release bands, all of which were donated to support medical staff.
The pandemic restrictions caused all face to face volunteering tohalt, but the Company’s employees found innovative ways topivot. More than 100 employees volunteered to take part in a
virtual hackathon, coordinated by the Airbus Humanity Lab.
Projects ranged from logistic support to prototyping valves
which transformed a diving mask from the brand Decathlon into
a safe and reusable face shield. Airbus Balance for Business, anemployee volunteer platform with more than 10,000 followers also
found innovative solutions to show its support. As an example,
Airbus Africa Community was able to share open sourceplans and prototypes for the manufacture and 3D printing ofprotective equipment for healthcare workers in Africa. These
were widely shared via collaborative digital platforms enabling,for example, Senegalese researchers to use them and start
rapid manufacturing of essential material. The Airbus Foundation
supported this project through the acquisition of five 3D printers
for an NGO in Senegal to print plastic visors and prototype
respirators.
As well as sharing its innovation and technical know-how, theCompany also used its global reach to inspire and entertain
children (and support their parents) around the world, who werespending more time at home. Through its Discovery Spaceplatform, the Airbus Foundation offered a series of fun andengaging videos for children to explore the science behind theCompany – from learning how planes fly to travel and life on themoon. Airbus China also developed a series of aviation on-lineclasses, aiming to inspire interest in aviation and enrich the digital
experience of children studying at home.
When the pandemic moves beyond crisis into recovery, theCompany commits to strengthening opportunities for its
employees to support their local communities. Closely alignedwith the Airbus Foundation, a global community engagement
programme is under development and is scheduled to be
deployed in 2021 to build trusted partnerships with charitableorganisations in local communities. The programme will beenabled through a digital platform to create, mobilise andmeasure the Company’s social impact activities against theframework of the UN SDGs.
The Company’s principal vehicle for corporate philanthropy, theAirbus Foundation refocused its 2020 budget to respond to the
COVID-19 pandemic, prioritising support for the humanitarian
actions of its NGO partners. In light of changing societal needs,
the Foundation also revisited its mission and a new vision for theFoundation was approved by its Board of Directors in April 2020.
As well as retaining strong support for humanitarian and youth
development activities, the Airbus Foundation’s strategic
priorities now include “environment” as a third axis, focusing on
nature preservation and assisting the climate change mitigation
actions of its NGO partners. For further information on the
Airbus Foundation mission and activities, please visit the Airbus
Foundation annual report available on the Company’s website.

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

6.2 Other Corporate Activities
Digital Transformation at Airbus
Overview
For four years, the Company implemented a digital transformationthat has made it today an advanced digital company from theearly design of its products to its Customers.
2020 was the year of the COVID-19 crisis, and beyond, the year ofresilience. Digital was key as we adapted ourselves to new ways
of working, making the Company and its customers stronger thanever. The digital strategy introduced in 2016 is a major contributor
to this performance.
The Company’s resilience resulted from its versatility. By selecting
Google Workspace, the Company quickly increased thenumber of employees working remotely from 3,000 up to
32,000. Some 16,000 Extended Enterprise users connecteddaily, securing a zero business interruption for the Company,
as well as its customers and affiliates. Putting in place strong
and modern Information Management, Cyber Security, Data
Governance foundations and skills was a foundation of thiscontinuity achievement.
The four years of digital exploration, incubation and industrialisation
have resulted in mature industrial-grade digital aviation
platforms such as Skywise, Digital Design Manufacturing andServices (“DDMS”), Artificial Intelligence, Advanced Analytics,
Airline Sciences, Augmented Reality and Internet of Things.
These capabilities have been embedded into the Company’s
mainstream activities to create a seamless digital experience.
This was vital for the production rate adaptation and also fordeliveries. As an example, 37 aircraft finished the industrial
process early and were sent to delivery centres thanks to a
new parts reallocation workflow. The Company focused on its
customers, the airlines, developing dedicated applications suchas aircraft parking and return to flight, alleviating instantaneousback to business operations.
Digitisation has fostered a change in our mindsets, whileempowering employees and unlocking digital possibilities.
This has prepared the Company to cope with the challenges ofdelivering the priority programmes in a fully collaborative digitallandscape while transitioning for a sustainable future.

Developing Further Skywise
and DDMS as Backbonesof Airbus’ Digital Continuity
SkywiseAt its origin, Skywise was launched to make the data lockedin our discrete legacy systems accessible and actionable bythose needing it for their day-to-day operations. Quickly adopted
by more than 15,000 employees, it has also become an airline
favourite. Skywise is now the flagship platform of the aerospaceindustry’s digital transformation, linking original equipment
manufacturers, airline customers and aerospace suppliers.
In 2020, the Company’s open aerospace data platform continued
to grow, and proved how the Company’s strategy to place
data at the heart of the transformation was a successful bet.
With data unlocked from previous siloes, a virtuous circle has
been created: with in-service data flowing back into operations

and aircraft design, delivering incremental ameliorations andimprovements. Data architecture ensures that data becomes the
single source of truth powering the Company’s operations andproducts, transforming the Company to a more fact-based, agile,empowered, data-driven organisation. Every airline or supplier
reported improvement to their workflows and operations after
adopting Skywise. With more than 130 airlines now use Skywise.
Based on their testimonials we estimate that Skywise has saved
the airline industry at least US$ 200 million a year.
This exponential growth was sustained because Skywise wasdesigned from the start with the right framework, a strict data
governance implementation and industrial scalability. This madeit possible to start small and then scale up. The technology
partner’s world-leading capabilities in data integration played a
key role in the adoption; yet this exponential growth was driven
by the focus on value creation focus and engagement modelwith the business more than by the technology itself.

DDMS
Going one step further, DDMS is taking this transformation up alevel by building in native end-to-end digital and data continuity.
The expected benefits are immense and require building a newworldwide industrial ecosystem, systems and processes todesign, produce and maintain aircraft. DDMS’s ambition is noless than to leverage what an Aircraft or Aerospace Product
Digital Mock Up (“DMU”) can bring, extending it to Simulation,
Artificial Intelligence, Manufacturing and Services processes fromthe early concept and design phase through to the in-service
phase. The mandate is to make DDMS ready for the next aircraft
programme. As a first key step, DDMS concepts and solutions
will be deployed for the Eurodrone programme and for Airbus
Helicopters’ new products.
Major contributions have been made to the current programmes
this year:–– Single-Aisle aircraft Ramp-up: increased availability of the
3D-configured DMU and preparation of the next Solution “Lean
Product Lifecycle Management”. This resulted in a leap forwardin performance (real-time consolidation of the configured DMU)
to secure the A321 XLR and cure major issues in Single-Aisle
configuration management, improving quality thanks to 3Dmodels, while increasing standardisation and re-use acrossprogrammes;–– A321 XLR: delivery of Digital Factory’ capabilities, Integration of
the Product / Industrial process view for the Rear Center Tank;–– Nacelle Innovative Solution (NIS): completed deployment of
DDMS principles (configuration management, co‑design).
Demonstrator achieved and then stopped. Fur therdemonstration planned in 2021 with Green Pulse programme;–– A350 digital continuity: deployment of the solution at St Nazaire
and Hamburg with 100 end users. Expected savings onStandard Operational Instructions updates under measure.
The first feedback was positive and in line with ambitions;–– Eurodrone: first deployment of the solution for “Preliminary
Design and Configuration Management”. These capabilities will
be tested by end users early in 2021 for a Go Live at Eurodrone
Program T0. The next step in 2021 is to address “Detailed
Design and Configuration Management” needs;–– Helicopters: solution deployed for Meca 4.0 reusing NIS
demonstrator and A350 digital continuity assets addressing
work preparation for the H175 helicopter. Plans for extending
to all AirbusHelicopters programmes in the course of 2021.

Airbus SE / Report of the Board of Directors 202089

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

Leveraging Available, Stateof the Art, Future-Ready
Foundations
Thanks to the integration of the Digital Transformation Office andInformation Management teams, the Company has been able
to further industrialise and leverage the 11 digital technology
platforms created since 2016 (API, Cloud, DevOps, Big Data,
IoT, ITSM, Monitoring, Mixed Reality, Artificial Intelligence, Mobile
Apps, UI/UX).
The Information Management, Cyber Security and Corporate
Security teams continued their transformation programmes in2020 while navigating the many additional challenges that the
pandemic brought.

Furthermore, reflecting society’s sensitivity to aviation’s effecton climate change, we enhanced our aircraft trajectory engine
to encompass non-CO2 effects such as contrails avoidance.
This new capability will be of great importance to the design of
the NSA and ZeroE aircraft, as well as for providing rational logic
regarding the actual effect of aviation on the climate.

The year saw a step change in the number of users working
from home. Direct secure access to Google Workspace allowed
more than 60,000 employees to maintain levels of productivity.

Internet of Things (“IoT”)

With the ever-changing cyber environment, the ability to detect
and respond to threats remains ever critical. Over 200 security
incidents were handled every month. We enhanced the detection
coverage of our Security Operation Centre by introducing an
additional 240 use cases.
Further development of the off-boarding process enabled
us to safely release 2,000 users, by securing accesses andcontrolling data loss. In total, data export was reduced by
81.5% last year against a 200 terabyte baseline. The newly
developed on-boarding process ensured that the Company’s
personal computer (“PC”) fleet was kept up-to-date from acyber perspective, without the need for users to come to thesite. This was a key reason why we were successfully protected
when one of our major information management suppliers was
attacked. In addition, a systematic PC check and quarantine
is applied to equipment being returned after a long period ofhome office use. 2021 will see the project extended to provide
secure connectivity to our extended enterprise users, andfurther reduce the risk of a cyber attack.
The extension of our security controls to protect 94 criticalindustrial assets was another key step to protecting our
production environments.
Insider protection is also becoming a priority and will continue to
evolve in 2021, with the development of a cyber security centre
of competence in Spain. As part of the ongoing transformation
we will continue to improve our internal capability by recruiting
new team members in Europe and India.

Continued Exploration
to be Ready for Future Step
Change Technologies
In 2020, exploration continued in the fields of artificial intelligence,
IoT and connectivity, investigating areas where these technologies
would bring benefits to the aerospace and defence industry.

Airline Sciences
The aim of the Airline Sciences team is to provide a true,
operational digital representation of an airline in all its complexities
and business models. Having a bottom-up approach enables theCompany to test out different aircraft technologies and concepts,
validate product strategy, help out in sales campaigns, develop
new services and more importantly, understand the Customers’
perspective across all layers of the Company.

90

With the onset of the COVID-19 crisis in 2020, we were able torepurpose some of the work already carried out and show theeffect of dropping traffic demand on airline networks, frequencies,
grounding of aircraft, both leased and owned, as well as theoverall impact on airline profit and loss. This new capability will
not only help the Company to identify the financial strengths or
weaknesses of our customers, and the likelihood of failure andrecovery, but also help out in seeking new service opportunities.
These opportunities may be with airline customers, lessors,
investors or other institutional actors.

Airbus SE / Report of the Board of Directors 2020

In 2020, IoT was put at the core of the Company’s industrial
system for all relevant functional domains (operations, services,logistics). A state-of-the art IoT cloud platform based on the
Airbus Public Cloud Platform was successfully industrialised
and rolled out to all Company Divisions. Dedicated solutions
are available on the premises as well if needed. Over the last
three years, more than 150 operational use cases have been
explored and over 30 of them have been industrialised withclear targets for cost reduction, quality improvement, shortertime to market, and process efficiency. Over 20,000 smart
devices are deployed in operations for tracking parts andlogistics, over 500 production machines are connected to the
IoT platform with full big data capability. This provides a greatbasis for future scaling up of Airbus Industry 4.0 activities
across the Group. In 2021, there will be a focus on scaling
the solutions and delivering cost savings, increasing cybersecurity protection and integration in the overall Airbus data
ecosystem, as well as the roll out of the application in all Airbus
regions (China, Asia, US).

Aircraft Connectivity
Despite the 2020 COVID-19 crisis and lockdown, we delivered
connected aircraft demonstrators, including EASA certificationfor one of them, thanks to an imaginative and agile crossfunctional team. 2021 will be the year of in-service operations of
the demonstrators and the handover to business. The team has
also supported the creation of the “Connectivity House”, a neworganisation established to streamline complex connectivity
projects.

Artificial Intelligence
Finally, the Company has advanced new industrial platforms in
AI. These technologies include time-series anomaly detection
for avoiding failure in our industrial machines and aircrafts,
automated classification of export-controlled data to secure ourcompliance, and shop floor computer vision to gain new visibility
into the safety and quality of our manufacturing environment.

Concluding Remarks and 2021 Challenges
In 2020, the Company has shown its ability to adapt quickly in acomplex environment. Looking beyond this achievement, 2021
is a time for simplification, especially in our complex Information
Systems environment of over 6,000 business applications.
Additionally, the completion of the organisation’s transition will
result in the financial benefits of optimisation.

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

The digital expertise spread through the organisation by valueadding projects and franchises, and embedded within business
functions, will be coordinated by a coherent central value
management. The Digital Academy will support employees andmanagers across the Company by way of communities, in-depth
digital knowledge and up-skilling to strengthen digital in everyday
ways of working.

accountable within their perimeters to both Technology, Divisional
Engineering and Product Strategy. Their responsibilities include
securing continuous improvement in Divisional competitivenessand the ability to develop business. Within the Company,
commercial specific priority is given to technologies for nextgeneration aircraft, bringing together product, production systemand services.

2021 will continue the digital transformation. More than ever,speed, agility and change management will be key. For the DDMS
programme, it will be a year to build the digital landscape ofthe future. Security will further boost its ability to handle future
threats by deploying a cutting-edge organisation, which willbolster measures to prevent incidents across the Group. Thistransformation will be also coloured by “green” IT, so contributing
to a sustainable decarbonised future.

In order to maximise the Company’s R&T activities, the Divisions
leverage the external ecosystem, utilising the portfolio of projects forfunding opportunities and engagement with global partnerships,
research institutes and universities. This ensures efficient R&T
portfolio execution, and benefits from new ways of working
including but not limited to agile methodology and minimum
viable product demonstration strategy. Responsibilities include
securing continuous improvement in Divisional competitivenessand the ability to develop business by establishing and driving
the Company’s R&T ambitions.

The digital potential for continuity and end-to-end industrial
resilience was demonstrated during this special year. Nevertheless,the possibilities have not been fully realised. We progressed a
lot in leveraging the “cloud” and in better understanding how
our already efficient industry can be improved even further. Thiscan be done by taking an even closer, more granular and holistic
view of the entire ecosystem. There are still margins to be tackled
where digital has a major role to play.
These initiatives will continue to succeed if they are addressedin a transverse, open and bold way. All building blocks are inplace – what will make the difference is our readiness to take apragmatic look at them and to act collectively and collaboratively.

Research and Technology
The Airbus Technology Department, led by the Chief Technology
Officer (“CTO”), is responsible for defining, delivering andprotecting all the Company’s Research and Technology (“R&T”),
enabling technology synergies across the Group, federating
innovation the Company’s activities and ensuring expertisein breakthrough technologies. The department applies a leanproject-based approach, tracked and managed using earned
value management processes. Technological collaboration withexternal research communities and partners is encouraged andcoordinated through the department with technical and scientificexperts. These duties are delivered through the capabilities
outlined here below.
The Company-wide integration of R&T technology is achieved
through cross-portfolio Technology Planning and Roadmapping,giving an exhaustive view of technology targets and investments.
In addition, Company-wide engagement with institutional andcommercial partners and public agencies is achieved throughcommon R&T Co-operations.
Central R&T (“CRT”) is the cross-divisional R&T organisation that
prepares the Company’s long-term technological capabilities.
CRT leads specific investigations in emerging areas of researchand conducts ambitious research projects while leveraging
leading academic, scientific and research institutions to best
utilise their expertise for achieving the Company’s ambitions.
Development of selected breakthrough technologies areaccelerated through Airbus Demonstrators, by employing rapid
maturation methods. This function delivers, thanks to its fully
owned Airbus UpNext subsidiary, flight demonstrator projects
that drive collaborative new ways of working, provide the highest
level of transparency and challenge the status quo by embedding
Airbus Technology DNA in a highly dynamic environment.
Each Division has its own R&T function, defining and delivering
the divisional projects. The Divisional R&T functions are primarily
planning, decision making and arbitration teams, which are

Fast-Track roadmap owners serve as principal advisors to the
CTO on technical vision and roadmaps for associated Technology
areas. Fast-Track roadmaps ensure coherency in the portfolio ofactivities and for the rapid advance of strategic priorities. Today
the Fast-Track roadmaps cover:–– Electrification;–– Industrial Systems and Manufacturing;–– Connectivity;–– Autonomy;–– Materials;–– Artificial Intelligence.
The Company’s intellectual property is protected, secured
and defended through a central intellectual property function
responsible for patent applications, portfolio investigations andportfolio defence.
Technological innovation and outreach to expertise in specificregions is delivered through three units: Acubed in Silicon Valley,
Airbus Innovation Centre in China and start-up engagement anddevelopment through BizLab.

Key Progress in 2020
Airbus Demonstrators – Airbus UpNext
Airbus UpNext identifies and evaluates the disruptive trends ofthe aerospace industry and demonstrates their potential for viable
products. It uses flying demonstrators to evaluate, mature andvalidate new technological breakthroughs for the R&T portfolio.
It invents and accelerates aerospace research and prototype
developments to achieve proof-of-concepts at scale and speed.
The E-Fan family of technology demonstrators aimed todemonstrate all-electric and hybrid-electric flight. In April 2020,
the Company and partner Rolls-Royce jointly decided to end the
E-Fan X demonstrator project. E-Fan X had successfully achieved
its three main initial goals:–– launching and testing the feasibility of a serial hybrid-electric
propulsion system in a demonstrator aircraft;–– gaining insight to develop a more focused roadmap on how
to progress on our ambitious de-carbonisation commitments;–– laying a foundation for the future industry-wide adoption andregulatory acceptance of alternative-propulsion commercial
aircraft.
The ZEROe concept planes revealed in September of 2020
unveiled the Company’s investigation and research into hydrogenbased propulsion. The ambition is supported builds on E-Fan X’stechnology bricks as well as a follow-up demonstrator.

Airbus SE / Report of the Board of Directors 2020

91

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

Airbus UpNext has also engaged in the development of anelectrical powertrain intending to demonstrate the feasibility andpotential of cryogenic and super-conducting technologies forvarying power-level applications.
The Autonomous Taxi, Take-off and Landing (“ATTOL”)
demonstrator has successfully leveraged computer vision
technologies and techniques to enable commercial aircraft tonavigate and detect obstacles during taxi, take off, approachand landing. In April 2020, the world’s-first autonomous visionbased flight combining the three functions (taxi/take-off/landing)was successfully performed by an Airbus A350. This marked thecompletion of the ATTOL demonstrator, a new demonstrator will
follow testing the next steps.
The Fello’Fly aims to prove the technical, operational andeconomic viability of wake-energy retrieval for commercial
aircraft. In September 2020, a collaboration with Frenchbeeand SAS Scandinavian Airlines was publicly announced.
In addition, the demonstrator team is partnering with France’s
Direction des services de la navigation aérienne (“DSNA”),
the UK’s NATS, and EUROCONTROL. This consortium will
support the demonstration of the operational feasibility of the
project.
The TELEO aims at providing seamless smart routing in satellite
constellations (LEO and GEO). In August 2020, it was agreed that
the ARABSAT BADR-8 platform (to be built by the Company)
would host the experimental TELEO optical communications
payload. The satellite is scheduled for launch in 2023.
A new Airbus UpNext demonstrator focuses on simplifying
Vertical Take-Off and Landing (“VTOL”)-craft mission preparationand control.
It will include a demonstrator aiming at flight testing highperformance wings is included.

Acubed (A3)

ACIC, based in Shenzhen, is the first Innovation Centre set up by
the Company in Asia. Its mission is to fully leverage China’s local
innovation ecosystem – including talents, partners and resources– combining this with the Company’s expertise in aerospace todiscover promising technologies, to identify solutions enabling
new services, and to fast-track delivery of innovation projects.

Manufacturing Innovation
The team is tasked with leveraging China’s strength in advanced
manufacturing to deliver value to the Company’s final assemblylines. It is developing computer vision for workflow/safety, smart
tooling, automation in logistics, industrial connectivity, remote
inspection and IoT/big data. Prototypes/solutions have beendeveloped and implemented in production environments.

Cabin Experience
Flexible display use cases have been presented to selectedcustomers with positive feedback.
The Cabin Wi-Fi application demonstrator integrated on
the A350 MSN002, third party applications were integrated on
the Shenzhen Lab to enrich the offer to Chinese customers.
Turning to the Company’s strategic project Keep Trust in Air Travel,
the team set up a contractual framework with a local supplier toprovide an antimicrobial polish, which disinfects Cabin Surfaces
for at least three months after its application. This should cometo market in the first half of 2021.

Tech Lab
Wireless sensor development is: a more cost-efficient way tocollect data from flight tests via wireless connection, being
developed in cooperation with Airbus Helicopter engineering.
Phase I was delivered in June 2020. Phase II is scheduled fordelivery in the first half of 2021.

Acubed is the Company’s innovation centre in Silicon Valley.
Its mission is to provide a lens into the future of the industry,transforming risk into opportunity to build the future of flight now.

A battery testing lab is: screening and testing the latest battery
technology in China.

The Advanced Digital Design and Manufacturing (“ADAM”)
project aims to develop methods and tools to drastically reduce
development lead-time and production cost by leveraging
emerging digital technologies. In 2020, ADAM successfully
demonstrated its added-value through several use cases, working
collaboratively with Airbus Americas Engineering, SATAIR and
Airbus in Europe. Use cases include project EVE for dramaticallyreducing the time needed for wing stressing on the A321ULR,
and a project with SATAIR to use Artificial intelligence to better
predict the optimum deployment of spares inventories worldwide.

Connectivity

The Wayfinder project is developing a scalable and certifiable
platform for Autonomy and Machine Learning to enable future
autonomous flight projects. In 2020, Wayfinder successfully
delivered algorithms for detection of runway features for the
ATTOL demonstrator enabling fully autonomous computer vision
landing of an A350 Flight Test aircraft. In 2020 Wayfinder started
Flight Testing on a Beech Baron 58 aircraft for rapidly developing
hardware and software for mass data collection.
The Company’s UTM project is focussed on integrating
Unmanned Aircraft Systems (“UAS”) into aviation with the aim ofservicing all forms of airborne traffic and using the UTM space tointroduce and test state of the art digital methods for future ATM
systems. The Company’s UTM is one of the first FAA approved
Low Altitude Authorisation and Notification Capability (“LANNC”)
providers for drone flights in controlled airspace, and is working
with DroneDeploy to provide this service to the market.

92

Airbus China Innovation Center (“ACIC”)

Airbus SE / Report of the Board of Directors 2020

The 5G Air-To-Ground (“ATG”) antenna alpha prototype was
successfully developed. A beta prototype and flight test isplanned 2021.

BizLab
Airbus BizLab is the aerospace accelerator where start-ups andthe Company’s intrapreneurs speed up the transformation of
innovative ideas into valuable businesses. The “cohort” of startups and intrapreneurs must quickly identify an internal Airbus
customer, develop the terms for a proof-of-concept and deliver
everything within a six-month period. Start-ups and internal
projects benefit from access to the Company’s coaches andexperts in various domains, and participate in events such as a“demo-day” with the Company’s decision makers, customers
and partners.
In 2019, Airbus BizLab signed a contract with the Indian start-up“Traxof Technologies” to automate the talent acquisition process
for Airbus’ Information Management organisations in India andEurope and the VR-Pilot Flight Training Solution (“VRnam”) was
acquired by the Company. The solution allows trainees pilots
to learn and practice flows and procedures in an immersive 3D
cockpit. Complemented by Airbus simulation competencies, itreplaces cockpit simulator time and offers remote training basedon an hourly-rate business model.

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

The internal project “Geotrend” was spun out and is now astart-up, counting more than 25% of France’s CAC 40 index
companies as customers of the service. Geotrend is a market andcompetitive intelligence solution based on artificial intelligencethat originated within the Company’s Defence and Space Division.
Internal projects in 2019 included “F!t”, a software solutionthat provides insight on the future of air traffic using big data,
artificial intelligence and scenario-based models. Additionally,
the Crowdcraft project implemented by the Airbus’s General
Procurement department is a crowdsourcing and crowd staffing
platform, which rapidly finds solutions to technical challenges
for leveraging worldwide talent. The solutions have reduced cost
and work time through more efficient and compliant means for
procurement buyers to access goods and services. The “Flight
Operations Data 2.0” project has been transferred to “NavBlue”
for commercialisation of the end-to-end solution for flight
operation data.

From a technology brick perspective, solutions are also in
R&T‑R&D transition. Light Helicopters HUMS flight demonstration
is in preparation on the H130 Flight Lab. The Rotor Strike
Alerting System has successfully passed its TRL6 stage andits supplemental technical certificate agreement has been signedwith a supplier (NSE company) ahead of in-service deployment.
Electrical components of the engine back-up system for the
H130 helicopter were delivered and their flight clearance started
for a first flight at the beginning of 2021. A new concept of leadlag dampers for heavy helicopters has been demonstrated on
the ground and the performance assessment will continue inflight in 2021.
From a programme point of view, the crisis confirmed thepriorities already defined. Robust roadmaps based on realistic
vision have been set out for mid- and long-term outcomes,
namely: CO 2 and noise emission reduction, autonomy andautomatisation, artificial intelligence, urban mobility.

Airbus Commercial Aircraft

Airbus Defence and SpaceIn response to the COVID-19 crisis, Airbus Commercial’s R&T
activity was refocused on zero emission technologies for next
generation aircraft, as well as other aircraft system technologies,
including propulsion, wing, fuselage, cabin, and industrialisation
as a transverse technology stream.

In 2020, the challenging economic situation led to a review ofthe overall R&T Portfolio of projects for the Company’s Defence
and Space Division. This exercise of prioritisation was done
under the premises of maintaining our core capabilities, focusing
only on those technologies that are required for adoption in key
products.

The key achievements in the area of zero-emission technologies
include both hydrogen combustion and hydrogen fuel cell
technologies, for a highly efficient hybrid-electric propulsion
system. Different approaches to integrating the liquid hydrogenstorage and distribution system have been considered andwill continue to be addressed in 2021. To further explore thepossibilities of fuel cell propulsion systems for aviation, theCompany has entered into a strategic partnership with a key
fuel cell system and component supplier. This partnership will
enable co-developing and co-validating aviation-compatible
fuel cell stacks. One specific configuration being investigated,amongst others, is the “pod” option of installing stand-alone fuelcell propulsion systems based on hydrogen fuel cell technology.
In the wing technology area, the high-rate, low-cost wingtechnologies needed for next generation aircraft have continued
to progress during 2020 into the industrial phase. Full size Wing
Demonstrators are now in manufacture at a component level,
involving Airbus plants across Europe and partners globally. The
Industrial System for the assembly of the demonstrators is being
installed and the first demonstrator will start the assembly phasein the middle of 2021.
The other main areas of technology development in 2020
include supporting the continuous improvement of Single-Aisle
and A350 aircraft. Within industrial systems, more robotics
are being deployed across the plants,as are in-process digital
feedback and verification. Technologies reducing the Company’senvironmental footprint and enabling a more circular economy
are also at the heart of the portfolio.

Airbus Helicopters
Despite the crisis, R&T activities made good technical progressin the key streams (Flagships and Safety) which were selected
as priority.
Key milestones have been achieved for flagship. The delivery bypartners of RACER flight components started and the assembly
will be completed by the middle of 2021. The first flight is now
planned for the second half of 2022.

The optimisation of the portfolio also offered the opportunity torevise the links between R&T and R&D, and reinforce them where
necessary, as well as to restructure the way that the Division
addresses its technologies and the link between technology
and product. The new portfolio is arranged using the concept offlagships, which represent the main areas of interest for focusing
the technology maturation to ensure proper adoption by internaland external customers.
In terms of main technology achievements, we focused ontechnologies related to automatic processing of informationfrom multiple sources, and enhanced high-resolution satellite
image processing and data analytics. Many of those technology
bricks are being integrated into the main family of products of
the Connected Intelligence Program Line.
In Space, significant effort has also been dedicated to work oncore technology bricks for the OneSat and Eurostar NEO familyof satellites, in the areas of: propulsion, materials and radiation
protection. There is special emphasis on radar developments
and on telecom payloads, including significant progress on the
optical communications roadmap.
Big achievements have been made in digitalisation andautomation for production and assembly, applicable for both
aircraft and satellites. Highlighted technologies here are
artificial vision, augmented reality and enhanced use of cobots(collaborative robots).
During 2020, we continued developing key technologies
for new combat platforms and systems, applicable both forEurofighter and future elements of the FCAS System-of-Systems.
This includes not only platform-related aspects (such as flightphysics methods and tools, energy and thermal management
developments), but also technology elements related to thecloud-based networking environment in which those platforms
will have to operate, combining assets that will have to work
collaboratively and in contested environments. This includes
manned-unmanned teaming demonstrations.

Airbus SE / Report of the Board of Directors 202093

6. Non-Financial Information and other Corporate Activities /6.2 Other Corporate Activities

Central Research and Technology (CRT)CRT operates in concert with Technology fast tracks androadmaps to meet strategic objectives, as well as with divisional
R&T to ensure the continuation of CRT activities. CRT has
55 projects running concurrently across its six domains.
Highlights from these activities include:–– Blue Sky: together with Airbus Engineering, Blue Sky(on behalf of the CTO) successfully led the Airbus Quantum
Computing Challenge to its conclusion. The worldwide
competition was the first of its kind. It made news aroundthe globe and attracted over 1000 people from more than
70 countries. The winner, Machine Reply, was announcedin December 2020 at the Q2B conference. A joint follow-on
project between Engineering, CRT, and Machine Reply willtake place in 2021. In addition, Blue Sky launched a novel
research project on biological means of recycling CFRP,
opening the door to novel means of ensuring long-termsustainability in aerospace.
–– Communications: pioneering new communication systemarchitectures and concepts of operation for ultra-high speed
connectivity between flying platforms and the terrestrial
infrastructure. Proof-of-concept of a special many-coreprocessor design for highly integrated airborne computer
systems, including safety-critical and high-performance
applications. Unprecedented precision in-door positioning
in the aircraft cabin using the existing wireless infrastructure.
Adopting research results on secure aircraft-to-groundequipment communications to the “Keep Trust in Air Travel”
initiative to sanitise the aircraft cabin against the COVID-19
virus.
–– Materials: green and sustainable materials and process
technologies projects have been accelerated, e.g. assessmentof different carbon capture routes to raw materials for carbon
fibre composites or eco-efficient value streams for Ti64 circular

94

Airbus SE / Report of the Board of Directors 2020

use (from production chips to new powder). Highly efficient
multi-functional structures with integrated printed sensors
inside the material lay-up have proven their robustness andfunctional feasibility during coupon testing. Digitalisation
Technologies have been shown to accelerate and improvematerials analytics and development processes, e.g. striation
counting in failure analytics images, evaluation of computer
tomography data or physical-chemical data or simulations witha volume element for composite digital twins. Multi‑material
printing technologies for tailoring parts has shown its feasibility
and triggered new application ideas (new heat exchanger
design concepts for zero emission flying).
–– Electrics: successful demonstration of a high-voltage cable
prototype capable of sustaining the required performances involtage (up to 3 kV) without undesired phenomenona such as
partial discharges, and with weight and flexibility improvement
for installation. The Zero Emission team makes use of thistechnology.
–– Virtual Product Engineering: five projects were concluded
and successfully handed over to divisional customers
addressing topics in efficient High Power Computing, future
Model Based System Engineering, modelling and simulation.
Topics launched in 2020 will investigate use of Artificial
Intelligence in Modelling and Simulation as well as addressing
simulation challenges for future Airbus platforms and industrial
systems.
–– Data Science: the team has concluded four major projects
that contributed either open or inner source software for use
in major projects in the business. A new project, Intelligent
Observe Orient Decide Act, has been launched with the aimof improving Commercial Aircraft manufacturing through thedelivery of a virtual assistant that integrates planning andscheduling capabilities.

7. Airbus Strategy /7.1 Commercial Leadership, Value Creation and Profitability

7. Airbus Strategy
7.1 Commercial Leadership, Value Creation
and Profitability
2020 has been an unprecedented year for the aviation industry
across the globe. The COVID-19 outbreak has demonstrated how
severely and fast black swan events can impact the business. In
this new environment, the purpose “We pioneer sustainableaerospace for a safe and united world” and the key elementsof the strategy will support Airbus to focus its efforts around what
Airbus contributes to the future:

Airbus’ aircraft are also very well suited to serve freighter and VIPmarkets and are proven to be competitive in selected militaryniches. With the same logic, the helicopter portfolio expands
through military versions of successful commercial products.
In the military field, Eurofighter has a performance today beyond
customer’s initial targets through intelligent upgrades, andremains a very strong competitor for export markets.

1. continue to grow Airbus as an Aerospace and Defence
leader;

1.2 Pioneering for the Next Generation

2. leveraging its European roots while pursuing a Global reachthrough local actions;
3. continue to invest in the future and in an evolving andcompetitive environment through the right combinationof growth, profitability and resilience;
4. lead the transformation of the aerospace industry tomeet progressing Environmental, Societal and Governancestandards.
The strategy answers: 1) what kind of leadership the Company
bases its success on, 2) how the Company defines its local
and international role, 3) how the Company secures resources
to invest in this global leadership, and 4) what role it will take intransforming the industry in line with environmental, social andgovernance standards going forward.

1. Continue to Grow Airbus asan Aerospace and Defence Leader
Leadership today is not a guarantee for leadership tomorrow.
It’s the belief of the Company that winning in the future needs tobe earned through continuous pioneering both on and around ourcurrent portfolio as well as when preparing the future generation
products and related services. All executed with the highest
quality and safety standards possible.

1.1 Keep Current Portfolio Youngand Competitive
Airbus financial success is strongly linked to capitalising on
Airbus current commercial aircraft portfolio through incremental
improvements. Airbus estimates that all current products havea substantial upside leading to exceptional longevity. This has
been done visibly through NEO versions of A320 and A330 andstretches such as the A321XLR, but also in small steps every day
on every product. The A330neo and the A350 XWB both deliver
high levels of fuel efficiency (25% saving in fuel consumption
compared to previous generation aircraft), accelerated pilot
onboarding (all wide-body aircraft benefit from a common typerating making pilot training shorter, smoother and lower cost),
and dream-inducing comfort through the exclusive Airspacecabin, setting a modern benchmark in passenger comfort andwellbeing.

In preparing their succession, the quest for sustainability willbe the game changer that secures continuation of the larger
purpose; to unite the world. This quest will fundamentally change
aerospace. Not since the introduction of the jet engine has theindustry been in front of such a challenge, in particular aroundnew energy sources. However new certification challenges,
new materials, new designs, new industrial processes, newbusiness models will also be assessed and could be a sourceof opportunity. In short, Airbus targets to set the standards andmature the technologies of sustainable aviation.

1.3 Build Advantages Through a Broad Span
Within Aerospace and Defence
The synergy of a broad portfolio and the resilience it brings is at
the core for Airbus now and also in the future. Most aerospaceplayers nurture a substantial defence and space element in theirportfolio to gain synergies and increase stability. For Airbus this isalso the path, with the commercial aircraft, helicopters, defence
and space activities all part of the portfolio. Hence governmental/
military and commercial business, product and services, fixed
wing and rotary, satellites and launchers, self and customer
funded are elements balancing the market variations, bringing
synergies as well as the investment cycles. Additionally, as Digital
Design, Manufacturing & Services require similar capabilities
across aerospace segments, owning a broad portfolio delivers
flexibility in resource allocation and reuse of investments in corecapabilities. It is also vital, as seen in the COVID-19 crisis to havestrong and complementary businesses alongside commercial
aviation within its portfolio.

1.4 E
 xpand as a Leader Towards
New Territories
Unmanned Air Mobility (“UAM”) is in the forefront of a revolution
to make mobility a three dimensional play in the future. Hence
capturing growth in new VTOL/UAM markets on both platforms
and services is a major contribution to the helicopter strategy.
For defence, the Air and Space power, combining aircraft,
unmanned systems and space assets managed with a cloud
structure for command and control, will revolutionise performanceof Airbus’ customers defence needs. In commercial, the quest
towards climate neutral solutions will be the game changer.

Airbus SE / Report of the Board of Directors 2020

95

7. Airbus Strategy /7.1 Commercial Leadership, Value Creation and Profitability

2. L everaging its European Roots
While Pursuing a Global Reach
Through Local Actions
In the past 50 years Airbus went from being a cooperation of
local aerospace companies in four European countries to a
global leader in commercial aerospace with a strong foothold in
defence and space. The ability of industrialists in Europe to work
together towards a common goal of creating one leading player
in commercial aerospace was decisive to the success story of
the Company. Such European vision obviously includes the UK
as one of its founding countries.
No aerospace and defence company is more culturally andhumanly diverse than Airbus. More than 140 nationalities makeup the Company’s workforce and over 20 languages are spoken,
reflecting the diversity of its global market and customer base.
This is a key strength of the Company in addressing global
markets. Airbus has built on its strong European heritage to
become truly international – with roughly 180 locations and morethan 1000 direct suppliers globally. The Company has aircraft
and helicopters final assembly lines across Asia, Europe andthe Americas.

3. C ontinue to Invest in Airbus’ Future
in an Evolving and Highly Competitive
Environment Through the Right
Combination of Growth, Profitability
and Resilience
Aerospace is a major backbone of the global economy anda vital service to people and businesses. Resilience throughhaving sufficient funds available to withstand the first shock; close
cooperation with stakeholders to ensure that the overall travelvalue chain survives; seamless coordination along the supplychain to detect issues rapidly; reinforcement of balance sheet tocontinue investing in future competitiveness; are all core to ensure
the industry keeps delivering its purpose to the world economy.
The Company believes that the way to remain attractive toinvestors, employees and society at large is to be at the forefrontof innovations and to lead in the global market. This requires
discipline on both revenues and the cost base throughout
all businesses to gain sufficient volume and profitability tocontinuously drive the industry forward as a leader. Having
successfully increased revenue and profit in recent years,
continuous improvement is a must to further support Airbus’
resilience and prepare for future investments. As the Company
delivers on its strategy as a leader with European roots andglobal reach, the Company is uniquely positioned to pioneer thisindustry, deepen the intimacy with its customers, expands its rolein Defence, Space and Helicopters whilst delivering shareholder
returns in line with market expectations.

4. L ead the Transformation of
the Aerospace Industry to Meet
Emerging Environmental, Societal
and Governance Standards
In essence aviation’s licence to grow in the future is linked tosustainability. Improving the environment is at the top of agendas
throughout the world. While one may argue for limiting mobility,
the Company believes the solution should not hinder connecting
and uniting people around the world. Making the world a smaller
and more transparent place to live makes it safer and moreinteresting for all. Discover, learn, share and keep safe are part of96

Airbus SE / Report of the Board of Directors 2020

basic human needs and a guiding star for the Company. Air travel
brings prosperity through the connections it makes. One in ten
jobs around the world is in the travel and tourism industry, andaircraft are the veins in this system. Prosperity is required todeliver the climate neutral transformation of the industry. Hence,the purpose of the Company is to find ways to combine travel
and uniting people in a sustainable and safe way. On top, social
sustainability and good governance are also integral parts andkey to manage the Company’s vision for a sustainable future.
Airbus’ business is deeply connected with Environmental, Social,and Governance (“ESG”) objectives. The Company believeshaving more to offer society and need to be continuously awareof its broader impacts.

4.1 L
 ead the Journey Towards Clean Aerospace
Airbus and the industry at large must ultimately determine ways
to eliminate the impact of the aviation industry on climate. This
must be achieved by the current generation. It’s expected by theflying public and by society at large. Working with Aviation bodies
Airbus strives to set the industry on a strong path to the lowest
climate impact solutions as part of its commitment to the Paris
Agreement. The Company is rising to the challenge of climatechange and targets to significantly reduce the climate impact of
the aviation sector.
Two main routes are currently followed in parallel to lead thetransition of the aviation industry to the lowest climate impact
solution. Success in both routes is necessary to reach climate
targets. Within Airbus they are named eFuel, sustainable aviation
fuel, and ZEROe (zero-emission) through new hydrogen powered
aircraft solutions.
eFuel. Focus is on how to increase SAF developments as thiswill play a key role in reducing the environmental footprint of theaviation industry. Production, distribution and ways to make itaffordable are all part of this route. The Company has alreadysuccessfully established SAF flights out of Hamburg with its
Beluga transport aircraft since December 2019 and now also
introduces SAF in the delivery of aircraft to customers. However,volume and pricing of SAF is still far from where it needs to be
today to go mainstream.
ZEROe. The Company revealed three concepts for the world’s
first zero-emission commercial aircraft in September 2020. These
concepts each represent a different approach to achieving zeroemission flight, exploring various technology pathways andaerodynamic configurations in order to support the Company’s
ambition of leading the way in bringing the lowest possible climate
impact solutions to the aviation industry.
Beyond the aircraft itself, in order to tackle these challenges,
airports will also require significant hydrogen transport andrefuelling infrastructure to meet the needs of day-to-day
operations.
The Company’s ambition is to enter into commercial service thefirst zero-emission aircraft by 2035.

4.2 B
 uild our Business on the Foundationof Safety
Safety cannot be compromised. That’s why the number one
priority for the Company is safeguarding those who interact with
its services and everyone (and everything) that flies aboard orinteracts with one of its products. To this end, the Company
tackles the product safety approach end to end, and theCompany aims to exceed industry standards, focus on safetyenhancements in its product line, and support the safe operationof all its products.

7. Airbus Strategy /7.2 Top Company Objectives 2021

As for employee health and safety, the Company aims topermanently and sustainably transform the way the Company
thinks and acts in regards to health and safety in the workplace.
For the Company it’s about more than preventing occupational
accidents, and it applies to everyone impacted by the business.
Beyond product and people safety, the Company supports
national customers with solutions in their role of guaranteeing
safety to their overall populations.

4.3 Respect Human Rights and Foster Inclusion
The Company’s respect for human rights is an essential partof responsible business conduct in its business activities
and throughout the value chain. The Company believes
that everyone who works either for or with the Company
contributes to its continued innovation, creativity, and businesssuccess. Therefore, it’s imperative that the Company fosters
empowerment, collaborative working, inclusiveness and diversity
to enable a workplace to which people can bring their best selves.
The Company ensures that its employees have access to a wealthof education and employee mobility opportunities to grow theirskills because the Company strongly believes a more-educatedworkforce is a more-empowered workforce.

4.4 Exemplify Business Integrity
As the Company’s operations span across more than
100 countries, it has a clear obligation to act in conformity tolaws and regulations wherever the Company is in the world.
The Company conducts its business ethically, based on its
values, and not only in compliance with laws and regulations.
Furthermore, the Company strives for a culture of integrity in its
people, partners and suppliers.
In an effort to improve accountability, the Company is strengthening
its current compliance programmes and with the intention to
become a benchmark in this area. To this end, the Company
has established a dedicated Ethics & Compliance programmeand organisation, ensuring that ethical and compliant behaviour
is deeply embedded throughout the Company, supported byclear Code of Conduct and Integrity Principles. The Company
has an enhanced anti-corruption policy and has conducted morethan 160,000 awareness training in the past three years alone.

7.2 Top Company Objectives 2021
Customer

Enable the Future

Establish the Company as the partner of choice by building strong
customer relationships through the excellence of its people,
products and services

Deliver ongoing top programmes (A321XLR, A350 Step 7,
Eurodrone, OneSat, H160…) and services roadmap. Prepare
Airbus’ future products and industrial system (ZEROe, eFUEL,
technology and industry/robotics roadmaps, FCAS). Build thedigital landscape of the future with DDMS at the core.

Industrial Performance
Achieve end-to-end nominal production and delivery flow andsecure end-to-end industrial system resilience, with Product
Safety and Quality as a foundation
Financial PerformanceStrengthen the Company’s financial situation and assurecompetitiveness
PeopleFinalise company restructuring, drive business transformation andsupport employees by living Airbus’ values and demonstrating
leadership, with safety at work as a shared priority
Sustainability
Progress the Company’s decarbonisation ambition and reduce
its environmental footprint

The Company always:–– keeps customers at its heart of what it does to deliver value
and reliability;–– considers health, safety and quality as non-negotiable;–– optimises and adhere to end-to-end processes;–– drives change and transformation for performance andcompetitiveness;–– protects its business from security threats and malicious
actions;–– fosters innovation by being open-minded and creative in allits does;–– instils a culture of inclusiveness and continuous learning;–– promotes a speak up and listen up culture and acts withintegrity and respect.

The information contained in this Board Report will enable you to form an opinion on the situation of the Company and the operations,which are submitted to you for approval.
For further information and detail regarding the Company’s activities, finances, corporate governance and in particular risk factors,
the reader should refer to the Company’s website www‌.‌airbus.com.
The Board of Directors hereby declares that, to the best of its knowledge:–– the Financial Statements for the year ended 31 December 2020 give a true and fair view of the assets, liabilities, Financial Positionand profits or losses of the Company and undertakings included in the consolidation taken as a whole; and–– this Board Report gives a true and fair view of the position as per the balance sheet date, and of the development and performance
during the 2020 financial year of the Company and undertakings included in the consolidation taken as a whole, and the principal
risks facing the Company have been described herein.

Airbus SE / Report of the Board of Directors 2020

97

8. Financial Targets for 2021 /8. Financial Targets for 2021
As the basis for its 2021 guidance, the Company assumes:–– no further disruptions to the world economy, air traffic, the Company’s internal operations, and its ability to deliver products andservices.
The Company’s 2021 guidance is before M&A.
On that basis, the Company targets to at least achieve in 2021:–– same number of commercial aircraft deliveries as in 2020;–– EBIT Adjusted of € 2 billion;–– Breakeven Free Cash Flow before M&A and Customer Financing.

* * * * * * * * * * * * * *98Airbus SE / Report of the Board of Directors 2020

The Board of Directors
René Obermann, Chairman
Guillaume Faury, Chief Executive Officer
Victor Chu, Director
Jean-Pierre Clamadieu, Director
Ralph Dozier Crosby, Jr., Director
Lord Drayson (Paul), Director
Mark Dunkerley, Director
Stephan Gemkow, Director
Catherine Guillouard, Director
Amparo Moraleda, Director
Claudia Nemat, Director
Carlos Tavares, Director

Leiden, 17 February 2021

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- This document was printed in France by an Imprim’Vert certified printer on PEFC certified paper produced from sustainably managed forest.

Airbus SE
European public limited-liability company (Societas Europaea)
Mendelweg 30, 2333 CS Leiden, The Netherlands
Registered with the Dutch Chamber of Commerce under number 24288945