REGISTRATIONDOCUMENT 2011

11 mmCompany” or “EADSGroup”)
is a Dutch company, which is listed in France, Germany and Spain. The applicable regulations with respect to public information andprotection of investors, as well as the commitments made by the Company to securities and market authorities, are described in this
Registration Document (the “Registration Document”).
In addition to historical information, this Registration Document includes forward-looking statements. The forward-looking statements
are generally identified by the use of forward-looking words, such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”,“predict”, “will”, “should”, “may” or other variations of such terms, or by discussion of strategy. These statements relate to EADS’ future
prospects, developments and business strategies and are based on analyses or forecasts of future results and estimates of amounts not
yet determinable. These forward-looking statements represent the view of EADS only as of the dates they are made, and EADS disclaims
any obligation to update forward-looking statements, except as may be otherwise required by law. The forward-looking statements in this
Registration Document involve known and unknown risks, uncertainties and other factors that could cause EADS’ actual future results,
performance and achievements to differ materially from those forecasted or suggested herein. These include changes in general economic
and business conditions, as well as the factors described in “Risk Factors” below.

approved by, the Autoriteit Financiële Markten
April 2012 in its capacity as competent authority under the
Wet op het financieel toezicht (as amended) pursuant to Directive 2003/71/EC. This Registration Document may be used insupport of a fi
if it is supplemented by a securities note and a summary approved by the AFM.

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EADS

REGISTRATION DOCUMENT 2011

Risk Factors
1 Information on EADS’ Activities
2 Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
3 General Description of the Company
and its Share Capital
4 Corporate Governance
5 Entity Responsible for the Registration
Document

EADS REGISTRATION DOCUMENT 2011 I 3

EADS

REGISTRATION DOCUMENT 2011

Risk Factors

7

1.

Financial Market Risks

8

2.

Business-Related Risks

11

3.

Legal Risks

16

4.

Industrial and Environmental Risks

18

1

Information
on EADS’ Activities

21

1.1

Presentation of the EADS Group

22

1.1.1 Overview

22

1.1.2 Airbus

27

1.1.3 Eurocopter

36

1.1.4 Astrium

39

1.1.5 Cassidian44

1.1.6 Other Businesses

48

1.1.7 Investments

49

1.1.8 Insurance

50

Discussion
2 Management’s
and Analysis of Financial Condition
and Results of Operations
61
2.1

Operating and Financial Review

62

2.1.1 Overview

62

2.1.2 Critical Accounting Considerations,
Policies and Estimates63

2.1.3 Measurement of Management’s Performance68

2.1.4 Results of Operations72

2.1.5 Changes in Consolidated Total Equity(Including Non-Controlling Interests)

77

2.1.6 Liquidity and Capital Resources78

2.1.7 Hedging Activities

85

2.2

Financial Statements

87

2.3

Statutory Auditors’ Fees

88

2.4

Information Regarding
the Statutory Auditors

88

Description of the Company
3 Generaland its Share Capital
91

1.1.9 Legal and Arbitration Proceedings

51

1.1.10 Research and Technology, Intellectual Property

52

1.1.11 Environmental Protection

54

1.1.12 Employees

57

3.1

1.1.13 Incorporation by Reference

58

1.2

58

3.1.1 Commercial and Corporate Names,
Seat and Registered Ofﬁce

92

3.1.2 Legal Form

92

3.1.3 Governing Laws and Disclosures92

3.1.4 Date of Incorporation
and Duration of the Company

94

3.1.5 Objects of the Company

94

3.1.6 Commercial and Companies Registry94

3.1.7 Inspection of Corporate Documents

95

3.1.8 Financial Year95

3.1.9 Allocation and Distribution of Income

95

3.1.10 General Meetings

95

3.1.11 Disclosure of Holdings

97

3.1.12 Mandatory Offers

98

Recent Developments

4 I EADS REGISTRATION DOCUMENT 2011

General Description of the Company

92

GENERAL TABLE OF CONTENTS

3.2

General Description of the Share Capital100

3.2.1 Issued Share Capital100

3.2.2 Authorised Share Capital100

3.2.3 Modiﬁcation of Share Capitalor Rights Attached to the Shares
3.2.4 Securities Granting Accessto the Company’s Share Capital

4 Corporate
Governance

119

4.1

121

Management and Control

100

4.1.1 Board of Directors, Chairman
and Chief Executive Ofﬁcer

122

100

4.1.2 Board Committees

132

4.1.3 Executive Committee

133

3.2.5 Changes in the Issued Share Capital since
Incorporation of the Company

101

4.1.4 Enterprise Risk Management System

135

3.3

102

4.1.5 Compliance Organisation

139

3.3.1 Shareholding Structure

102

4.2

3.3.2 Relationships with Principal Shareholders

103

3.3.3 Form of Shares

107

3.3.4 Changes in the Shareholding of the Company
Since its Incorporation

4.2.1 Remuneration Granted to Directors
and Principal Executive Ofﬁcers

140

108

3.3.5 Persons Exercising Control over the Company

109

4.2.2 Long-Term Incentives Granted
to the Chief Executive Ofﬁcer

143

3.3.6 Simpliﬁed Group Structure Chart

109

4.2.3 Related Party Transactions

144

3.3.7 Purchase by the Company of its Own Shares111

4.2.4 Loans and Guarantees Granted to Directors

144

3.4

114

Shareholdings and Voting Rights

Dividends

3.4.1 Dividends and Cash Distributions Paid
Since the Incorporation of the Company

114

3.4.2 Dividend Policy of EADS

114

3.4.3 Unclaimed Dividends

115

3.4.4 Taxation

115

3.5

116

Annual Securities Disclosure Report

4.3

Interests of Directors and Principal
Executive Ofﬁcers

140

Employee Proﬁt Sharing
and Incentive Plans

144

4.3.1 Employee Proﬁt Sharing
and Incentive Agreements

144

4.3.2 Employee Share Ownership Plans

145

4.3.3 Long-Term Incentive Plans

145

5

Entity Responsible
for the Registration Document

153

5.1

Entity Responsible
for the Registration Document

154

Statement of the Entity Responsible
for the Registration Document

154

5.3

Information Policy

155

5.4

Undertakings of the Company regarding
Information

155

Signiﬁcant Changes

155

5.2

5.5

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RISK FACTORS

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Risk Factors
1.

Financial Market Risks

8

2.

Business-Related Risks

11

3.

Legal Risks

16

4.

Industrial and Environmental Risks

18

EADS REGISTRATION DOCUMENT 2011 I 7

RISK FACTORSFINANCIAL MARKET RISKS

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EADS is subject to many risks and uncertainties that may affect its ﬁnancial
performance. The business, results of operation or ﬁnancial condition of
EADS could be materially adversely affected by the risks described below.
These are not the only risks EADS faces. Additional risks and uncertainties
not presently known to EADS or that it currently considers immaterial may also
impair its business and operations.

1. Financial Market Risks
EU Sovereign Debt Crisis
EADS’ operations and performance depend signiﬁcantly on
economic conditions in Europe, the US and the rest of theworld. Economic and market conditions may deterioratesigniﬁcantly 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 those in the
Middle East, North Africa and other regions). Sharp economic
downturns may develop quickly and could affect EADS’
business for short or extended periods and have a negative
effect on EADS’ future results of operation and ﬁnancial
condition.
European ﬁnancial markets have recently experienced
signiﬁcant disruptions as a result of concerns regarding theability of certain countries in the euro-zone to reduce their publicdeﬁcits and reﬁnance or pay their debt obligations as they comedue. Banks with exposure to these countries and which mustalso comply with stricter regulations have faced funding issues
and have started to reduce their balance sheets accordingly.
Such disruptions have contributed to increased volatility inthe exchange rate of the euro against other major currencies,
affected the credit markets and created uncertainty regarding
the near-term economic prospects of countries in the EU as wellas the quality of loans to sovereign debtors and banks in the
EU. There has also been an indirect impact on ﬁnancial markets
worldwide. If economic conditions in the relevant European
countries or in Europe more generally were to deteriorate or
if more pronounced market disruptions were to occur, there
could be a new or incremental tightening in the credit markets,
low liquidity, and extreme volatility in credit, currency and8 I EADS REGISTRATION DOCUMENT 2011

equity markets. This could have a number of effects on EADS’
business, including:O requests by customers to postpone or cancel orders foraircraft due to, among other things, lack of adequate credit
supply from the market to finance aircraft purchases or weaklevels of passenger demand for air travel and cargo activity
more generally;
O an increase in the amount of sales financing that EADS
must provide to its customers to support aircraft purchases,
thereby increasing its exposure to the risk of customer
defaults despite any security interest it might hold in theunderlying aircraft;
O further reductions in public spending for defence, homeland
security and space activities, which go beyond those budget
consolidation measures already proposed by governments
around the world;
O insolvency or financial instability of outsourcing partners
or suppliers or their inability to obtain credit to financedevelopment and / or manufacture products, resulting in
product delays;
O continued de-leveraging as well as mergers and bankruptcies
of banks or other financial institutions, resulting in a smaller
universe of counterparties and lower availability of credit,
which may in turn reduce the availability of bank guarantees
needed by EADS for its businesses or restrict its ability to
implement desired foreign currency hedges; andO default of investment or derivative counterparties and otherfinancial institutions, which could negatively impact EADS’
treasury operations including the cash assets of EADS.

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EADS’ ﬁnancial results could also be negatively affected
depending on gains or losses realised on the sale or exchangeof ﬁnancial instruments; impairment charges resulting
from revaluations of debt and equity securities and otherinvestments; interest rates; cash balances; and changes in

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fair value of derivative instruments. Increased volatility in theﬁnancial markets and overall economic uncertainty would
increase the risk of the actual amounts realised in the future on
the Company’s ﬁnancial instruments differing signiﬁcantly fromthe fair values currently assigned to them.

Foreign Currency
A signiﬁcant portion of EADS’ revenues is denominatedin US dollars, while a substantial portion of its costs is incurredin euro, and to a lesser extent, in pounds sterling. Consequently,
to the extent that EADS does not use ﬁnancial instruments
to hedge its exposure resulting from this foreign currency
mismatch, its proﬁts will be affected by market changes inthe exchange rate of the US dollar against these currencies,
and to a lesser extent, by market changes in the exchange
rate of pound sterling against the euro. EADS has therefore
implemented a long-term hedging portfolio to help secure therates at which a portion of its future US dollar-denominatedrevenues (arising primarily at Airbus and in the commercial
satellite business) are converted into euro or pound sterling, inorder to manage and minimise this foreign currency exposure.
There are complexities inherent in determining whether andwhen foreign currency exposure of EADS will materialise,in particular given the possibility of unpredictable revenue
variations arising from order cancellations, postponements
or delivery delays. EADS may also have difﬁculty in fully
implementing its hedging strategy if its hedging counterparties
are unwilling to extend further credit, and is exposed to the riskof non-performance or default by these hedging counterparties.
The exchange rates at which EADS is able to hedge its foreign
currency exposure may also deteriorate, as has been the caseduring the past several years with the steady appreciation of theeuro against the US dollar. Accordingly, EADS’ foreign currency
hedging strategy may not protect it from signiﬁcant changes inthe exchange rate of the US dollar to the euro and the poundsterling, in particular over the longer-term, which could have anegative effect on its results of operation and ﬁnancial condition.
In addition, the portion of EADS’ US dollar-denominatedrevenues that is not hedged in accordance with EADS’ hedging
strategy will be exposed to changes in exchange rates, which
may be signiﬁcant.
Currency exchange rate ﬂuctuations in those currencies
other than the US dollar in which EADS incurs its principal
manufacturing expenses (mainly the euro) may have the effect of
distorting competition between EADS and competitors whose
costs are incurred in other currencies. This is particularly true
with respect to ﬂuctuations relative to the US dollar, as manyof EADS’ products and those of its competitors (e.g., in the
defence export market) are priced in US dollars. EADS’ ability tocompete with competitors may be eroded to the extent that anyof EADS’ principal currencies appreciates in value against the
principal currencies of such competitors.
EADS’ consolidated revenues, costs, assets and liabilities
denominated in currencies other than the euro are translated
into the euro for the purposes of compiling its ﬁnancial
statements. Changes in the value of these currencies relative
to the euro will therefore have an effect on the euro value of
EADS’ reported revenues, costs, earnings before interest andtaxes, pre-goodwill impairment and exceptionals (“EBIT*”), otherﬁnancial result, assets and liabilities.
See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — 2.1.7 Hedging Activities”
for a discussion of EADS’ foreign currency hedging strategy. See“Management’s Discussion and Analysis of Financial Condition
and Results of Operations — 2.1.2.6 Accounting for Hedged
Foreign Exchange Transactions in the Financial Statements” fora summary of EADS’ accounting treatment of foreign currency
hedging transactions.

Sales Financing
In support of sales, EADS may agree to participate in theﬁnancing of customers. As a result, EADS has a signiﬁcant
portfolio of leases and other ﬁnancing arrangements withairlines and other customers. The risks arising from EADS’sales ﬁnancing activities may be classiﬁed into two categories:(i) credit risk, which concerns the customer’s ability to perform
its obligations under a ﬁnancing arrangement, and (ii) aircraft
value risk, which primarily relates to unexpected decreases in
the future value of aircraft. Measures taken by EADS to mitigate
these risks include optimised ﬁnancing and legal structures,
diversiﬁcation over a number of aircraft and customers, credit
analysis of ﬁnancing counterparties, provisioning for the credit

and asset value exposure, and transfers of exposure to third
parties. No assurances may be given that these measures
will protect EADS from defaults by its customers or signiﬁcantdecreases in the value of the ﬁnanced aircraft in the resalemarket.
EADS’ sales ﬁnancing arrangements expose it to aircraft
value risk, because it generally retains security interests inaircraft for the purpose of securing customers’ performanceof their ﬁnancial obligations to EADS, and because it may
guarantee part of the market value of certain aircraft during
limited periods after their delivery to customers. Under adverse

EADS REGISTRATION DOCUMENT 2011 I 9

RISK FACTORSFINANCIAL MARKET RISKS

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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 of a ﬁnancing
customer default at a time when the market value for a usedaircraft has unexpectedly decreased, EADS would be exposedto the difference between the outstanding loan amount andthe market value of the aircraft, net of ancillary costs (suchas maintenance and remarketing costs, etc.). Similarly, if an
unexpected decrease in the market value of a given aircraft
coincided with the exercise window of an asset value guaranteewith respect to that aircraft, EADS would be exposed to losing
as much as the difference between the market value of suchaircraft and the guarantee amount. No assurances may be
given that the provisions taken by EADS will be sufﬁcient tocover these potential shortfalls. Through the Airbus Asset

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Management department or as a result of past ﬁnancing
transactions, EADS is the owner of used aircraft, exposing it
directly to ﬂuctuations in the market value of these used aircraft.
In addition, EADS has several outstanding backstop
commitments to provide ﬁnancing related to orders on Airbus’
and ATR’s backlog. While past experience suggests it is unlikelythat all such proposed ﬁnancing actually will be implemented,
EADS’ sales ﬁnancing exposure could rise in line with future
sales growth depending on the agreement reached withcustomers. Despite the measures taken by EADS to mitigate therisks arising from sales ﬁnancing activities as described above,
EADS remains exposed to the risk of defaults by its customers
or signiﬁcant decreases in the value of the ﬁnanced aircraft in
the resale market, which may have a negative effect on its future
results of operation and ﬁnancial condition.

Counterparty Credit
In addition to the credit risk relating to sales ﬁnancing as
discussed above, EADS is exposed to credit risk to theextent of (i) non-performance by its counterparties forﬁnancial instruments, such as hedging instruments and cash
investments, and (ii) price risks arising from the credit spreads
embedded in cash investments. However, the Group has
policies in place to avoid concentrations of credit risk and toensure that credit risk is limited.
Cash transactions and derivative counterparties are contractedwith a large number of ﬁnancial institutions worldwide, but
only if they meet certain high credit quality criteria. EADS
has set up a credit limit system to actively manage and limit
its credit risk exposure. This limit system assigns maximum

exposure lines to counterparties of ﬁnancial transactions,based on a minimum credit rating threshold as published byStandard & Poor’s, Moody’s and Fitch Ratings, on a minimum
amount of total assets and a maximum tolerable price to buy
credit protection against the default of such counterparty. The
respective limits are regularly monitored and updated, butthere can be no assurances that despite these limits and thediversiﬁcation of counterparties, EADS will not lose the beneﬁtof certain derivatives, or cash investments, in case of a systemic
market disruption. In such circumstances, the value and liquidityof these ﬁnancial instruments could decline and result in asigniﬁcant impairment, which may in turn have a negative effecton EADS’ future results of operation and ﬁnancial condition.

Equity Investment Portfolio
EADS holds several equity investments for industrial or strategic
reasons, the business rationale for which may vary over the lifeof the investment. Equity investments are either accounted forusing the equity method (associated companies), if EADS has
the ability to exercise signiﬁcant inﬂuence, or at fair value. If fairvalue is not readily determinable, the investment is measured at
cost.
EADS’ principal investment in associates is Dassault Aviation.
The net asset value of this investment was € 2.6 billion as of
31 December 2011. EADS is exposed to the risk of unexpectedmaterial adverse changes in the fair value of Dassault Aviation

10 I EADS REGISTRATION DOCUMENT 2011

and that of other associated companies. For equity investments
other than associates, which make up only a fraction of EADS’
total assets, EADS regards the risk of negative changes in fairvalue or impairments on these investments as non-signiﬁcant.
Treasury shares held by EADS are not considered to be equity
investments. Additionally, treasury shares are not regarded as
being exposed to risk, as any change in value of treasury sharesis recognised directly in equity only when sold to the market andnever affects net income. Treasury shares are primarily held tohedge the dilution risk arising from employee stock ownershipplans and the exercise by employees of stock options.

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Pension Commitments
EADS participates in several pension plans for both executive
as well as non-executive employees, some of which are
underfunded. For information related to these plans, see“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Notes to the Consolidated
Financial Statements (IFRS) — Note 25B: Provisions for
retirement plans”. Although EADS has recorded a provisionin its balance sheet for its share of the underfunding basedon current estimates, there can be no assurance that theseestimates will not be revised upward in the future, leading EADS
to record additional provisions in respect of such plans.
Necessary adjustments of such provisions are driven by (i) the
discount factor (dependent in part on interest rates) and theinﬂation rate applied to calculate the net present value of thepension liabilities, (ii) the performance of the asset classes
which are represented in the pension assets, and (iii) additional
cash injections contributed by EADS from time to time to thepension assets. EADS has taken measures to limit potential
losses on the pension assets and to better match thecharacteristics of the pension liabilities with those of the pension
assets as a long-term objective. Nevertheless, any required
additional provisions would have a negative effect on EADS’
total equity (net of deferred taxes), which could in turn have anegative effect on its future ﬁnancial condition.
For further information relating to ﬁnancial market risks andthe ways in which EADS attempts to manage these risks, see“Notes to the Consolidated Financial Statements (IFRS) —Note 34A: Financial risk management”.

2. Business-Related Risks
Commercial Aircraft Market Cyclicality
Historically, the market for commercial aircraft has shown
cyclical trends, due in part to changes in passenger demand
for air travel and cargo activity, which are in turn primarily
inﬂuenced by economic or gross domestic product (“GDP”)
growth. Other factors, however, play an important role indetermining the market for commercial aircraft, such as (i) the
average age and technical obsolescence of the ﬂeet relative to
new aircraft, (ii) the number and characteristics of aircraft takenout of service and parked pending potential return into service,(iii) passenger and freight load factors, (iv) airline pricing policies,(v) airline ﬁnancial health and the availability of outside ﬁnancing
for aircraft purchases, (vi) deregulation and (vii) environmental
constraints imposed upon aircraft operations. EADS expects
that the market for commercial aircraft will continue to be
cyclical, and that downturns in broad economic trends may
have a negative effect on its future results of operation andﬁnancial condition.

Terrorism, Pandemics and Catastrophic Events
As past terrorist attacks (such as in New York and Madrid)and the spread of pandemics (such as H1N1 ﬂu) havedemonstrated, terrorism and pandemics may negatively affectpublic perception of air travel safety and comfort, which may
in turn reduce demand for air travel and commercial aircraft.
The outbreak of wars, riots or political unrest in a given region
may also affect the willingness of the public to travel by air.
Furthermore, major airplane crashes may have a negative effecton the public’s or regulators’ perceptions of the safety of agiven class of aircraft, form of design, airline or air trafﬁc. As aresult of terrorism, geopolitical instability, pandemics and othercatastrophic events, an airline may be confronted with sudden
reduced demand for air travel and be compelled to take costly

security and safety measures. In response to such events, andthe resulting negative impact on the airline industry or particular
airlines, EADS may suffer from a decline in demand for allor certain types of its aircraft or other products, and EADS’customers may postpone delivery or cancel orders.
Moreover, EADS’ business may be disrupted by the occurrenceof these and other events, including information technology
or infrastructure attacks or failures, damaging weather or actsof nature and other crises. Any such disruptions could affect
EADS’ internal operations or services provided to customers,
and could have a signiﬁcant adverse effect on EADS’ future
results of operations and ﬁnancial condition as well as its
reputation.

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Dependence on Key Suppliers and Subcontractors
EADS is dependent on numerous key suppliers andsubcontractors to provide it with the raw materials, parts andassemblies that it needs to manufacture its products. Certain of
these suppliers may experience ﬁnancial or other difﬁculties in
the future, in particular those with a signiﬁcant foreign currency
mismatch between revenues denominated in US dollars anda substantial portion of costs incurred in euro. Dependingon the severity of these difﬁculties, some suppliers could beforced to reduce their output, shut down their operations or ﬁlefor bankruptcy protection, which could disrupt the supply ofmaterials and parts to EADS.
It may be difﬁcult for EADS to ﬁnd a replacement for certain
suppliers without signiﬁcant delay, thereby impacting its ability
to complete its customer obligations satisfactorily and in a timely
manner. These events could in turn have a negative impact on
EADS’ future results of operation and ﬁnancial condition. To

the extent that EADS decides in the future to provide ﬁnancial
or other assistance to certain suppliers in ﬁnancial difﬁculty inorder to ensure an uninterrupted supply of materials and parts,
it could be exposed to credit risk on the part of such suppliers.
Finally, if the macro-economic environment leads to higher thanhistoric average inﬂation, the labour and procurement costs of
EADS may increase signiﬁcantly in the future. This may lead tohigher component and production costs which could in turnnegatively impact EADS’ future proﬁtability and cash ﬂows,
to the extent EADS is unable to pass these costs on to its
customers or require its suppliers to absorb such costs. EADS’
suppliers or subcontractors may also make claims or assertions
against it for higher prices or other contractual compensation,in particular in the event of signiﬁcant changes to development
or production schedules, which could negatively affect EADS’
future proﬁtability.

Industrial Ramp-Up
As a result of the large number of new orders for aircraft
recorded in recent years, EADS intends to accelerate its
production in order to meet the agreed upon delivery schedules
for such new aircraft (including helicopters). As it nears full
capacity, EADS’ ability to further increase its production rate
will be dependent upon a variety of factors, including executionof internal performance plans, availability of raw materials,
parts (such as aluminium, titanium and composites) and skilledemployees given high demand by EADS and its competitors,
conversion of raw materials into parts and assemblies, andperformance by suppliers and subcontractors (particularly
suppliers of buyer-furnished equipment) who may experience
resource or ﬁnancial constraints due to ramp-up. Managementof such factors is also complicated by the development of
new aircraft programmes in parallel, in particular at Airbus,
which carry their own resource demands. Therefore, the failureof any or all of these factors could lead to missed delivery
commitments, and depending on the length of delay in meetingdelivery commitments, could lead to additional costs andcustomers’ rescheduling or terminating their orders.

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 andcountry to country. In particular, the signiﬁcant deterioration in
public ﬁnances and high debt levels of the main industrialised
countries have led several of them recently to seek to reduce
their public spending. This is especially true with respect
to defence and security budgets, where certain countries
have either proposed or already implemented substantial
reductions. Depending on how future budget reductions are
ﬁnally implemented, the termination or reduction of funding forexisting or new programmes may have a negative effect on

12 I EADS REGISTRATION DOCUMENT 2011

EADS’ future results of operations and ﬁnancial condition. In thecase where several countries undertake to enter together into
defence or other procurement contracts, economic, political orbudgetary constraints in any one of these countries may havea negative effect on the ability of EADS to enter into or perform
such contracts.
Further, a signiﬁcant portion of EADS’ backlog is concentrated
in certain regions or countries, including the US, China, India
and the United Arab Emirates. Adverse economic and politicalconditions as well as downturns in broad economic trends inthese countries or regions may have a negative effect on EADS’
future results of operation and ﬁnancial condition.

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Availability of Government and Other Sources of Financing
Since 1992, the EU and the US have operated under anagreement that sets the terms and conditions of ﬁnancial
support that governments may provide to civil aircraft
manufacturers. In late 2004, however, the US sought tounilaterally withdraw from this agreement, which eventually led
to the US and the EU making formal claims against each otherbefore the World Trade Organization (“WTO”). While both sides
have expressed a preference for a negotiated settlement thatprovides for a level playing ﬁeld when funding future aircraft
developments, they have thus far failed to reach agreement on
key issues. The terms and conditions of any new agreement,or the ﬁnal outcome of the formal WTO proceedings, may limit
access by EADS to risk-sharing-funds for large projects, may
establish an unfavourable balance of access to government
funds by EADS as compared to its US competitors or may
theoretically cause the European Commission and the involved
governments to analyse possibilities for a change in thecommercial terms of funds already advanced to EADS.

In prior years, EADS and its principal competitors have each
received different types of government ﬁnancing of productresearch and development. However, no assurances canbe given that government ﬁnancing will continue to be madeavailable in the future, in part as a result of the proceedings
mentioned above. Moreover, the availability of other outside
sources of ﬁnancing will depend on a variety of factors such as
market conditions, the general availability of credit, EADS’ credit
ratings, as well as the possibility that lenders or investors could
develop a negative perception of EADS’ long- or short-term
ﬁnancial prospects if it incurred large losses or if the level of
its business activity decreased due to an economic downturn.
EADS may therefore not be able to successfully obtain
additional outside ﬁnancing on favourable terms, or at all, which
may limit EADS’ future ability to make capital expenditures,
fully carry out its research and development efforts and fundoperations.

Competition and Market Access
The markets in which EADS operates are highly competitive.
In some areas, competitors may have more extensive or
more specialised engineering, manufacturing and marketing
capabilities than EADS. In addition, some of EADS’ largest
customers may develop the capability to manufacture products
or provide services similar to those of EADS. This would resultin these customers supplying their own products or services
and competing directly with EADS for sales of these products orservices, all of which could signiﬁcantly reduce EADS’ revenues.
There can be no assurance that EADS will be able to compete
successfully against its current or future competitors or thatthe competitive pressures it faces in all business areas will not
result in reduced revenues or market share.

In addition, the contracts for many aerospace and defence
products are awarded, implicitly or explicitly, on the basis ofhome country preference. Although EADS 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
for certain products. The strategic importance and politicalsensitivity attached to the aerospace and defence industries
means that political considerations will play a role in the choiceof many products for the foreseeable future.

Technologically Advanced Products and Services
EADS offers its customers products and services that aretechnologically advanced, the design and manufacturing of
which can be complex and require substantial integration andcoordination along the supply chain. In addition, most of EADS’
products must function under demanding operating conditions.
Even though EADS believes it employs sophisticated design,
manufacturing and testing practices, there can be no assurance
that EADS’ products or services will be successfully developed,
manufactured or operated or that they will be developed or will
perform as intended.

Certain of EADS’ contracts require it to forfeit part of its
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 on timeor to perform adequately. No assurances can be given that
performance penalties or contract cancellations will not be
imposed should EADS fail to meet delivery schedules or othermeasures of contract performance – in particular with respect
to new development programmes such as the A350 XWB or
A400M, for example.

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In addition to any costs resulting from product warranties,
contract performance or required remedial action, suchproblems may result in increased costs or loss of revenues –in particular as a result of contract cancellations – which could

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have a negative effect on EADS’ future results of operation andﬁnancial condition. Any problems in this respect may also havea signiﬁcant adverse effect on the competitive reputation of
EADS’ products.

Major Research and Development Programmes
The business environment in many of EADS’ principal operating
business segments is characterised by extensive research anddevelopment costs requiring signiﬁcant up-front investmentswith a high level of complexity. The business plans underlying
such investments often contemplate a long payback period
before these investments are recouped, and assume a certain
level of return over the course of this period in order to justify
the initial investment. There can be no assurances that thecommercial, technical and market assumptions underlying suchbusiness plans will be met, and consequently, the payback
period or returns contemplated therein achieved. EADS expects
that its consolidated research and development expenses may
increase signiﬁcantly in future years in connection with the
ramp-up of new programmes across all Divisions, in particulardevelopment of the A350 XWB.

Successful development of new programmes also depends
on EADS’ ability to attract and retain aerospace engineers andother 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. There can be
no assurances that EADS will attract and retain the personnel it
requires to conduct its operations successfully. Failure to attract
and retain such personnel or an increase in EADS’ employee
turnover rate could negatively affect EADS’ future results ofoperation and ﬁnancial condition.

Restructuring, Transformation and Cost Saving Programmes
In order to improve competitiveness, offset rising procurement
costs and achieve proﬁtability targets, among other things,
EADS and its Divisions have launched several restructuring,transformation and cost saving programmes over the past
several years. These include Group-wide programmes such as
Power8 Plus and “Future EADS”, as well as Division-speciﬁc
programmes.
Anticipated cost savings under these programmes are basedon estimates, however, and actual savings under these
programmes may vary signiﬁcantly. In particular, EADS’ cost
reduction measures are based on current conditions and do
not take into account any future cost increases that could
result from changes in its industry or operations, including new
business developments, wage and cost increases or otherfactors. EADS’ failure to successfully implement these planned
cost reduction measures, or the possibility that these efforts

may not generate the level of cost savings it expects going
forward, could negatively affect its future results of operationand ﬁnancial condition.
In addition to the risk of not achieving the anticipated level ofcost savings from the programmes above, EADS may also incur
higher than expected implementation costs. In many instances,
there may be internal resistance to the various organisational
restructuring and cost reduction measures contemplated.
Restructuring, closures, site divestitures and job reductions may
also harm EADS’ labour relations and public relations, and haveled and could lead to work stoppages and/or demonstrations.
In the event that these work stoppages and/or demonstrations
become prolonged, or the costs of implementing the
programmes above are otherwise higher than anticipated,
EADS’ future results of operation and ﬁnancial condition may be
negatively affected.

Acquisitions, Joint Ventures & Strategic Alliances
As part of its business strategy, EADS may acquire businesses
and form joint ventures or strategic alliances. Acquisitions are
inherently risky because of difﬁculties that may arise when
integrating people, operations, technologies and products.
There can be no assurance that any of the businesses that
EADS acquires can be integrated successfully and as timely
as originally planned or that they will perform well and deliver

14 I EADS REGISTRATION DOCUMENT 2011

the expected synergies once integrated. In addition, EADS may
incur signiﬁcant acquisition, administrative and other costs inconnection with these transactions, including costs related tointegration of acquired businesses. While EADS believes thatit has established appropriate and adequate procedures andprocesses to mitigate these risks, there is no assurance thatthese transactions will be successful.

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Public-Private Partnerships and Private Finance Initiatives
Defence customers, particularly in the UK, increasingly request
proposals and grant contracts under schemes known as
public-private partnerships (“PPPs”) or private ﬁnance initiatives(“PFIs”). PPPs and PFIs differ substantially from traditional
defence equipment sales, as they often incorporate elements
such as:EADS is party to PPP and PFI contracts, for example throughParadigm with Skynet 5 and related telecommunications
services, and in the AirTanker (FSTA) project. One of thecomplexities presented by PFIs lies in the allocation of risks andthe timing thereof among different parties over the lifetime of the
project.

O the provision of extensive operational services over the life of
the equipment;

There can be no assurances of the extent to which EADS
will efﬁciently and effectively (i) compete for future PFI or PPP
programmes, (ii) administer the services contemplated under
the contracts, (iii) ﬁnance the acquisition of the equipment andthe on-going provision of services related thereto, or (iv) accessthe markets for the commercialisation of excess capacity. EADS
may also encounter unexpected political, budgetary, regulatory
or competitive risks over the long duration of PPP and PFI
programmes.

O continued ownership and financing of the equipment by
a party other than the customer, such as the equipment
provider;O mandatory compliance with specific customer requirements
pertaining to public accounting or government procurement
regulations; andO provisions allowing for the service provider to seek additionalcustomers for unused capacity.

Programme-Speciﬁc Risks
In addition to the risk factors mentioned above, EADS also
faces the following programme-speciﬁc risks (while this list does
not purport to be comprehensive, it highlights the current risks
believed to be material by management):
A350 XWB programme. In connection with the A350 XWB
programme, EADS faces the following main challenges:(i) ensuring the maturity of technology linked to the use ofcomposite materials, (ii) meeting the technical performancetargets for the aircraft and respecting the development
schedule, (iii) ensuring the production ramp-up and the rampup of key skilled personnel, e.g. for composite stress anddesign, (iv) securing the achievement of recurring cost targets,(v) ensuring the performance of the risk sharing partners,
including those selected for sites divested by Airbus and those
involved in the extended enterprise framework, (vi) maintaining
customer satisfaction with a new customisation policy which isa key enabler for the production ramp-up, and (vii) managing
customer contracts in coherence with the industrial delivery
plan;
A380 programme. In connection with the A380 programme,
EADS faces the following main challenges: (i) management ofstress in the supply chain as a result of the steep ramp-up in
production in coming years, (ii) making continued improvements
to lower the resources and costs associated with designingeach customised “head of version” aircraft for new customers,in order to allow a higher number of heads of version to becompleted each year, (iii) managing maturity in service, and(iv) mastering the root causes of, and launching the required
action to ﬁx, the hairline cracks discovered in the wing rib feetof certain A380 aircraft, and limiting associated costs to repair
costs only;

A400M programme. In connection with the A400M
programme, EADS faces the following main challenges:(i) ensuring that the aircraft is both civilly certiﬁed and meetsthe initial military certiﬁcation and qualiﬁcation requirements(initial operational clearance (IOC)) of programme customers,(ii) developing a full set of in-service support goods andservices that deliver mission success to programme customers,(iii) ﬁnalising aircraft development (engine, cargo systems,
defensive aids, etc.), (iv) preparing entry into service of the ﬁrst
aircraft together with the necessary set of support elements,(v) managing the anticipated difﬁculties on the production
ramp-up concurrently with the delivery of progressively
enhanced aircraft capabilities (standard operational clearance(SOC) 1 to 3), and (vi) meeting the contractual time schedule;
A320neo programme. In connection with the A320neo
programme, EADS faces the following main challenges:(i) management of stress in the supply chain as a result of theindustrial ramp-up, (ii) meeting the engine development status
and its schedule, and (iii) ensuring the availability of skilled
personnel for the programme;
NH90 programme. In connection with the NH90 programme,
EADS faces the following main challenges: (i) meeting thedevelopment schedule, the cost objectives and the technicalcontent (full operational conﬁguration of the NATO Frigate
Helicopter (NFH) version), (ii) continuing to proceed with theindustrial ramp-up on the programme, (iii) mastering thecontract renegotiations with governments and addressing
requests to reduce contractually binding orders, and(iv) assuring support readiness in connection with multiple ﬂeets
entering into service; andEADS REGISTRATION DOCUMENT 2011 I 15

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Lead systems integration. In connection with lead systems
integration projects (in particular Saudi border surveillance
contract), EADS faces the following main challenges: (i) meetingthe schedule and cost objectives with a high number of sites
with complex local infrastructure to deliver and the integration of

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COTS products (radars, cameras, sensors) with their interfaces
into the system, (ii) assuring an efﬁcient project and stafﬁng
ramp-up, and (iii) managing the rollout including subcontractors
as well as training and organisational adaptation of thecustomer.

3. Legal Risks
Dependence on Joint Ventures and Minority Holdings
EADS generates a substantial proportion of its revenues
through various consortia, joint ventures and equity holdings.
These arrangements include primarily:
O the Eurofighter and AirTanker consortia;
O three principal joint ventures: MBDA, ATR and Atlas
Electronik; andO investment in associates: Dassault Aviation.
The formation of partnerships and alliances with other market
players is an integral strategy of EADS, and the proportionof sales generated from consortia, joint ventures and equity
holdings may rise in future years. This strategy may from time
to time lead to changes in the organisational structure, or
realignment in the control, of EADS’ existing joint ventures.

EADS exercises varying and evolving degrees of control in
the consortia, joint ventures and equity holdings in which it
participates. While EADS seeks to participate only in ventures inwhich its interests are aligned with those of its partners, the riskof disagreement or deadlock is inherent in a jointly controlled
entity, particularly in those entities that require the unanimous
consent of all members with regard to major decisions andspecify limited exit rights. The other parties in these entities may
also be competitors of EADS, and thus may have interests thatdiffer from those of EADS.
In addition, in those holdings in which EADS is a minority
partner or shareholder, EADS’ access to the entity’s books
and records, and as a consequence, EADS’ knowledge of theentity’s operations and results, is generally limited as compared
to entities in which EADS is a majority holder or is involved in
the day-to-day management.

Product Liability and Warranty Claims
EADS designs, develops and produces a number of high proﬁleproducts of large individual value, particularly civil and military
aircraft and space equipment. EADS is subject to the risk of
product liability and warranty claims in the event that any of its

products fails to perform as designed. While EADS believes thatits insurance programmes are adequate to protect it from suchliabilities, no assurances can be given that claims will not arisein the future or that such insurance cover will be adequate.

Intellectual Property
EADS relies upon patent, copyright, trademark and trade
secret laws, and agreements with its employees, customers,
suppliers and other parties, to establish and maintain its
Intellectual property rights in technology and products
used in its operations. Despite these efforts to protect its
Intellectual property rights, any of EADS’ direct or indirect
Intellectual property rights could be challenged, invalidated
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16 I EADS REGISTRATION DOCUMENT 2011

in Europe and the US. Therefore, in certain jurisdictions EADS
may be unable to protect its proprietary technology adequately
against unauthorised third-party copying or use, which could
adversely affect its competitive position.
In addition, although EADS believes that it lawfully complies
with the Intellectual property rights granted to others, it has
been accused of infringement on occasion and could haveadditional claims asserted against it in the future. These claims

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could harm its reputation, cost it money and prevent it fromoffering certain products or services. Any claims or litigationin this area, whether EADS ultimately wins or loses, could betime-consuming and costly, injure EADS’ reputation or require it

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to enter into licensing arrangements. EADS might not be able toenter into these licensing arrangements on acceptable terms. If
a claim of infringement were successful against it, an injunction
might be ordered against EADS, causing further damages.

Export Controls and Other Laws and Regulations
The export market is a signiﬁcant market for EADS. In addition,
many of the products EADS designs and manufactures formilitary use are considered to be of national strategic interest.
Consequently, the export of such products outside of thejurisdictions in which they are produced may be restricted
or subject to licensing and export controls, notably by the
UK, France, Germany and Spain, where EADS carries out
its principal military activities as well as by other countries
where suppliers come from, notably, the US. There can be noassurance (i) that the export controls to which EADS is subject
will not become more restrictive, (ii) that new generations of
EADS 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 to obtain
export licenses for one or more clients or constrain EADS’ability to perform under previously signed contracts. Reduced
access to military export markets may have a signiﬁcant
adverse effect on EADS’ business, results of operation andﬁnancial condition.

EADS is also subject to a variety of other laws and regulations,
including among others, those relating to commercial
relationships, the use of its products and anti-bribery provisions.
In addition, EADS’ ability to market new products and enter
new markets may be dependent on obtaining government
certiﬁcations and approvals in a timely manner. Although
EADS seeks to comply with all such laws and regulations, evenunintentional violations or a failure to comply could result in
administrative, civil or criminal liabilities resulting in signiﬁcantﬁnes and penalties or result in the suspension or debarment of
EADS from government contracts for some period of time orsuspension of EADS’ export privileges.
In addition, EADS is sometimes subject to government inquiries
and investigations of its business and competitive environmentdue, among other things, to the heavily regulated nature of
its industry. Any such inquiry or investigation could result inan unfavourable ruling against EADS, which could have anegative effect on its business, results of operation and ﬁnancial
condition.

Litigation
EADS is currently engaged in a number of legal proceedings.
See “Information on EADS’ Activities — 1.1.9 Legal andArbitration Proceedings”. EADS expects to continue to incur
time and expenses associated with its defence, regardlessof the outcome, and this may divert the efforts and attentionof management from normal business operations. Although

EADS is unable to predict the outcome of these proceedings,
it is possible that they will result in the imposition of damages,
ﬁnes or other remedies, which could have a negative effect on
EADS’ business, results of operation and ﬁnancial condition.
An unfavourable ruling could also negatively impact EADS’stock price and reputation.

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4. Industrial and Environmental Risks
Given the scope of its activities and the industries in which it
operates, EADS is subject to stringent environmental, healthand safety laws and regulations in numerous jurisdictions
around the world. EADS therefore incurs, and expects tocontinue to incur, signiﬁcant capital expenditure and otheroperating costs to comply with increasingly complex laws andregulations covering the protection of the natural environment
as well as occupational health and safety, including costs
to prevent, control, eliminate or reduce emissions into theenvironment, releases of air pollutants into the atmosphere,
discharges to surface and subsurface water and soil, usageof certain substances and the content of EADS’ products, thedisposal and treatment of waste materials, and costs to comply
with reporting or warning regulations. Moreover, new laws andregulations, the imposition of tougher licence requirements,
increasingly strict enforcement or new interpretations of existinglaws and regulations may cause EADS to incur increased
capital expenditure and operating costs in the future in relation
to the above, which could have a negative effect on its results ofoperation and ﬁnancial condition.
If EADS fails to comply with these environmental, healthand safety laws and regulations, even if caused by factors
beyond its control, that failure may result in the assessmentof civil or criminal penalties and ﬁnes against it. Regulatory
authorities may require EADS to conduct investigations andundertake remedial activities, curtail operations or close
installations or facilities temporarily to prevent imminent
risks. In the event of an industrial accident or other serious
incident, employees, customers and other third parties may
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18 I EADS REGISTRATION DOCUMENT 2011

the environment (including natural resources). Further, liability
under some environmental laws relating to contaminated sites
can be imposed retroactively, on a joint and several basis, andwithout 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 suchdamages could have a negative effect on EADS’ results ofoperation and ﬁnancial condition.
In addition, the various products manufactured and soldby EADS must comply with relevant environmental, healthand safety and substances / preparations related laws andregulations in the jurisdictions in which they operate. Although
EADS seeks to ensure that its products meet the highest
quality standards, increasingly stringent and complex laws andregulations, new scientiﬁc discoveries, delivery of defective
products or the obligation to notify or provide regulatory
authorities or others with required information (such as under
the EU regulation known as “REACH”, which addresses the
production and use of chemical substances) may force EADS
to adapt, redesign, redevelop, recertify and / or eliminate its
products from the market. Seizures of defective products may
be pronounced, and EADS may incur administrative, civil or
criminal liability. In the event of an accident or other serious
incident involving a product, EADS may be required to conduct
investigations and undertake remedial activities. Employees,
customers and other third parties may also ﬁle claims for
personal injury, property damage or damage to the environment(including natural resources). Any problems in this respect
may also have a signiﬁcant adverse effect on the competitive
reputation of EADS’ products.

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Information on EADS’ Activities
1.1 Presentation of the EADS Group

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1.1.1 Overview

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1.1.2 Airbus

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1.1.3 Eurocopter

36

1.1.4 Astrium

39

1.1.5 Cassidian44

1.1.6 Other Businesses

48

1.1.7 Investments

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1.1.8 Insurance

50

1.1.9 Legal and Arbitration Proceedings

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1.1.10 Research and Technology, Intellectual Property

52

1.1.11 Environmental Protection

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1.1.12 Employees

57

1.1.13 Incorporation by Reference

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1.2 Recent Developments

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1.1 Presentation of the EADS Group
1.1.1 Overview
Due to the nature of the markets in which EADS operates and the conﬁdential
nature of its businesses, any statements with respect to EADS’ competitive position
set out in paragraphs 1.1.1 through 1.1.7 below have been based on EADS’ internal
information sources, unless another source has been speciﬁed below.
With consolidated revenues of € 49.1 billion in 2011, EADSis Europe’s premier aerospace and defence company andone of the largest aerospace and defence companies in theworld. In terms of market share, EADS is among the top
two manufacturers of commercial aircraft, civil helicopters,commercial space launch vehicles and missiles, and a leading
supplier of military aircraft, satellites and defence electronics.
In 2011, it generated approximately 76% of its total revenues
in the civil sector and 24% in the defence sector. As of
31 December 2011, EADS’ active headcount was 133,115.

2011 Highlights
2011 was a year of growth and progress for EADS, withstrengthening momentum in the commercial aircraft market,
reﬂected in new order and delivery records at Airbus. In theface of pressure on defence and public spending, EADS’Divisions took further steps to strengthen their competitive
position by investing in new products and capacities as well as
driving efﬁciency programmes. EADS successfully steered theGroup’s growth by managing several acquisitions in the services
business during the year.
Revenues in 2011 amounted to € 49.1 billion. They increased by
7.4% compared to 2010 due to growth from both volume andmix effects at Airbus and the increase of commercial activity at
Eurocopter. These increases more than offset a slight decrease
at Astrium and Cassidian. The overall 2011 revenue contribution
from the ﬁrst-time consolidation of major acquisitions wasaround € 300 million, mainly Vector Aerospace and Satair, while
the EBIT* (1) impact was insigniﬁcant.
EBIT* in 2011 amounted to € 1.7 billion. As of 31 December 2011,
the order book of EADS reached € 541.0 billion. The net cash
position of € 11.7 billion at year-end was higher than anticipated
due to improved performance and higher order intake.
In 2011, order intake amounted to € 131.0 billion, driven by thestrong momentum in commercial aviation and the reboundin the commercial helicopter market. Institutional markets
including defence and public spending have to be monitored
going forward in the context of budget pressure.
The commercial success of the Airbus civil aircraft business, with
1,419 net orders in 2011, represented one of the highlights of theyear. This success was driven mainly by the A320neo (new engine
option), which received 1,226 ﬁrm orders. The new aircraft isdesigned to deliver fuel savings of 15% compared to the current
A320 single-aisle family and is due to enter into service in 2015.
The A350 XWB programme progressed, with the ﬁrst major
airframe sections delivered to the A350 XWB ﬁnal assembly linein Toulouse at the end of 2011. Maturity of the A350 XWB main
components at ﬁnal assembly start remains one of the Group’s
top priorities. Entry into service is currently targeted for the ﬁrst
half of 2014, with the aim of achieving an appropriate maturity levelat each step. As the A380 series production gained in maturity,deliveries on that programme increased to 26 in 2011, from 18
in 2010. The A400M series production was launched early in2011 and ﬁnal assembly of the ﬁrst aircraft for customer delivery
began in November 2011. The Ariane 5 launcher completed
its 46th consecutive successful take-off, while the Euroﬁghter
programme achieved its 300th delivery in 2011, making it the
only new-generation multi-role aircraft to reach this milestone. In
addition, EADS’ subsidiary ATR recorded 119 net orders in 2011.
In the framework of its Vision 2020 goals, EADS conducted
several important acquisitions to expand the services
business across its Divisions. Airbus acquired the aviation
parts distributor Satair. Astrium acquired Vizada, a leading
independent provider of global satellite-based communication
services, and Eurocopter purchased Canada-based Vector
Aerospace, a specialist in helicopter maintenance.
In 2011, the global economic recovery remained uneven, with key
issues still to be addressed such as the European sovereign debt
crisis, the high level of US public debt and volatile capital inﬂows
to emerging economies. Continued ﬁnancial market volatility
showed how fragile economic recovery still remains in developed
markets, with the capital markets questioning the ability ofsovereign nations to repay their debts. Also, despite some shortterm exchange rate improvement in 2011, persistent US dollar
weakness has continued to disadvantage EU companies with acost base mainly in euros whereas US manufacturers continue toderive beneﬁt from more attractively priced exports.
In 2011, the commercial aviation business experienced continued
growth in passenger demand and positive proﬁtability, despite
the effects of the tsunami in Japan, unrest in the Middle Eastand North Africa and a high oil price level. However, regional(1) Unless otherwise indicated, EBIT* ﬁgures presented in this report are Earnings before Interest and Taxes, pre-goodwill impairment and exceptionals.

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1
differences still exist, with Asian Paciﬁc carriers contributing nearly
half of the proﬁt, while proﬁtability amongst European airlines as awhole was lower. Aircraft manufacturers experienced continued
high demand for commercial aircraft, driven by growth needsin emerging markets and mature market replacement demand
spurred by higher fuel prices. The competitive landscape among
manufacturers is intensifying, with several emerging players
developing aircraft to position themselves in the single-aisle market.
Further consolidation in the supplier base also occurred due to theneed for risk sharing partners and supplier rationalisation.
Defence and public spending faced downward pressure inEurope as well as in the US, whereas in areas such as the Middle
East and Asia, defence spending has increased. While US andEuropean defence budgets are expected to experience cuts overthe coming years, the full impact on industry is still unclear. The
need for some EU countries to reduce public sector spending
but still maintain defensive capabilities has driven governments
to look for ways to mitigate the impact on defence budgets.
Thus, compromises need to be found between maintaining
research and development and procurement budgets on the one
hand and considering adaptations of the operational budgets
on the other. The retirement of platforms, planned cancellationof some procurement orders and a reduction in personnel are
driving demand for closer collaboration between industry andend users, particularly in services.
Governments may therefore pursue further outsourcing ofdefence-related services to industry players in order to achieve
better value for money. Additionally, sustained growth in security
spending both from the government and private sectors has
been driven by the need to respond effectively to emergency
response requirements such as large-scale natural disasters,
ﬁres, ﬂooding and earthquakes, as well as asymmetric terrorist
threats and increasingly sophisticated cyber-attacks.
Airbus generated revenues of € 33.1 billion in 2011, representing
an increase of 10.4% compared to 2010. With 534 commercial
aircraft deliveries to 88 customers in 2011, Airbus beat its
previous record of 2010 by 24 aircraft. Deliveries included 421
A320 family aircraft, 87 A330s and 26 A380s. Airbus Militaryalso delivered a record number of 29 aircraft consisting of six
A330 MRTTs, 20 light and medium military transport aircraft(C212, CN235 and C295) and three P-3 conversions. Airbus
outperformed its order intake target by recording a total of 1,608
gross commercial aircraft orders in 2011. Of these orders, theA320neo received 1,226 ﬁrm orders. Airbus also successfullycompleted the ﬁrst ﬂight-test of a sharklet-ﬁtted A320 at year-end.
The ﬁrst major sub-assemblies of the A350 XWB were delivered
to Toulouse in 2011, ahead of the ﬁnal assembly. In order tofocus on preparing a robust and efﬁcient production process,Airbus re-scheduled the start of ﬁnal assembly to early 2012,
with the ﬁrst delivery planned for the ﬁrst half of 2014. Deliveriesramped-up on the A380, rising to 26 for the year, while theprogramme received 29 new gross orders in 2011. At the end of
2011, a total of 67 A380s had been delivered to seven customers.
The A400M programme is delivering results, having completed
more than 2,600 ﬂight hours in over 900 test ﬂights up to theend of 2011, with a ﬁfth aircraft joining the ﬂight test programme.
Finally, six A330 MRTTs were delivered to customers in 2011,
including the four ﬁrst MRTTs to the Royal Australian Air Force.

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Eurocopter generated revenues of € 5.4 billion in 2011,
representing an increase of 12.1% compared to 2010.
503 helicopters were delivered to customers in 2011, including
the 1,000th Dauphin and the 1,000th EC135. New net orders
totalled 457 helicopters. These orders, mostly from outside
Eurocopter’s home countries, included key EC175 and EC225
contracts and conﬁrm the recovery of the civil market, inparticular in the US and in the light helicopters segment. The
robust support and service activities were enhanced throughthe acquisition of Vector Aerospace and accounted for 38%
of revenues in 2011. 32 NH90 and 16 Tiger helicopters weredelivered in 2011. Five new customers took delivery of theirﬁrst NH90 helicopter during the year, while the 100 th NH90
was recently delivered. 2011 was also a year of innovation for
Eurocopter with the achievement of speed records with the X3
hybrid high-speed demonstrator aircraft, the presentation of the
new EC145 T2 version and the launch of the future X4 helicopter
intended to replace the Dauphin by the end of the decade.
At € 5.0 billion, Astrium’ revenues remained stable in 2011
despite a challenging economic climate in institutional
markets and increasing competition. New orders amounted
to € 3.5 billion and demonstrated continued momentum.
At year-end the order book stood at € 14.7 billion, equivalent
to three years’ worth of work. The Ariane 5 launcher continued
to prove its reliability by completing ﬁve launches in one year,
achieving its 46th successful launch in a row. Under a European
Space Agency initiative, Astrium is currently preparing the next
generation of launchers, through the Ariane 5 ME (Mid-life
Evolution), an expected programme due to enter service in2017. During 2011, Astrium delivered 13 satellites including
the ﬁrst two Galileo in-orbit validation satellites, and signed
contracts for six new satellites: four for telecommunicationand two for Earth observation, representing 20% of thecommercial satellite market. 2011 also saw the launch of thesecond automated transfer vehicle space craft, Johannes
Kepler, which successfully docked with the International Space
Station. Finally, Astrium Services was awarded a contract for
implementation of the European data relay system, the futuredata highway in space.
Cassidian achieved stable revenues of € 5.8 billion in 2011and booked € 4.2 billion of new orders, whereas its market
environment remains very challenging, The Euroﬁghter
programme and MBDA missile programmes continued to
be key revenue drivers, while new security programmes
also contributed. Proﬁtability declined slightly in line withexpectations, due to higher self-funded research anddevelopment for future business and a restructuring charge.
With the implementation of its transformation programme in2011, the Division is adapting to the changing defence market
by targeting growth outside Europe and developing newofferings in the security ﬁeld. The Division also re-shaped
its organisation to better address new markets and facilitatecustomer proximity. In core programmes, a major milestone waspassed in 2011 with the delivery of the 300th Euroﬁghter, andproduction of Euroﬁghter Tranche 3A was secured until 2017.
Within the ﬁeld of unmanned aircraft systems, 2011 was marked
by the successful ferry ﬂight of the Euro Hawk from California to
Germany in July. Cassidian also progressed with its self-funded

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medium-altitude long endurance unmanned aircraft system
initiative by further extending its international collaboration with
Turkish Aerospace Industries and Alenia Aermacchi, and more
recently formed an unmanned aircraft system partnership with
RheinMetall. Finally, Cassidian signed a letter of intention withpartner nations to continue full scale development of the next
generation of e-scan radar, and reinforced its leading position in
the radar market with the introduction of the next generation ofnaval radar TRS-4D and the SpexerTM 1000 security radar.
EADS turned 2011 into a year of growth and improved
performance, despite the European sovereign debt crisisand downward pressure on defence and public spending.
EADS will seek to use this success to pave the way for further
development in its second decade.

Strategy
In order to maximise value for its shareholders, EADS intends
to reinforce its position as a leader in major global aerospaceand defence markets. Beyond addressing current operational
challenges, EADS will continue to focus on providing superiorvalue to its customers through innovative product and service
solutions. EADS has deﬁned the following long-term objectives
for the future pursuant to its Vision 2020 plan:
O Improve portfolio balance between Airbus Commercial
manufacturing and other EADS activities. In 2011, revenuesat Airbus Commercial manufacturing continued to represent
a significant portion of EADS’ consolidated revenues forthe year. As a result, the Group remains vulnerable to thefinancial burden and risk associated with aircraft programmes,
US dollar exchange rate fluctuations and, to some extent,commercial aircraft market cyclicality. EADS will therefore
seek to increase the contribution to revenues from otherbusiness segments in future years, while still maintaining
long-term parity with Boeing in the commercial aircraft market.
In particular, EADS will seek to increase the proportion ofrevenues emanating from its defence, security and services
businesses. The Group will consider all options for achieving
such growth, including targeted acquisitions or partnershipsthat enhance its overall competitive position and add
capabilities to its portfolio, in particular in global key markets
such as Asia, the Middle East and the Americas;

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opportunities for sustained growth. Factors supporting thismarket include the rapid expansion of EADS’ in-service
commercial and defence fleet — which will require support
throughout its lifecycle — as well as the increasing tendency
on the part of defence and governmental agencies to
outsource various key functions. EADS will seek to provide
high value-added services related to both platforms
and systems, including advanced in-service support, airtraffic management systems and training. Revenue fromservices activities is targeted to account for 25% of EADS’
consolidated revenues by 2020. Such ambitions would
require further growth as EADS intends to continue playing
an increasingly important role in Europe;
O Become a truly global industrial group. A significant
portion of EADS’ suppliers, facilities and employees are
based in Europe, while the majority of its revenues originate
from outside of Europe. In order to achieve access to certain
markets and technology, optimise costs and hedge against
future US dollar volatility, EADS will aim to implement a
long-term industrial strategy that corrects this imbalanceby expanding its industrial footprint and partnerships in key
markets outside of Europe, including the Americas, Asia,
Russia and India. In the US, the goal is to establish a firmindustrial and commercial presence in the world’s largest
defence and homeland security market. Consequently, by
2020, EADS is seeking to have 40% of its sourcing and 20%
of its employees based outside of Europe;
O Continue to foster innovation. Innovation in product,
technology, manufacturing and customer offerings will define
EADS’ future. With development cycles shortening and newcompetitors emerging in all fields, EADS must maintain its
technological edge and cover a broad spectrum of capabilities
in order to remain a market leader. To maintain its innovativeedge, EADS will seek to systematically employ the latest
digital design and engineering tools in order to complete major
platform developments more quickly, and will seek to accelerate
the pace at which it reviews its core technologies so as toclose gaps against the competition. These core technologies
are expected to include C4I, network centric operations andunmanned aerial system technology, among others;

O Increase profitability. EADS intends to increasingly focus
on its core activities, which means moving towards a new
business model and re-allocating resources away fromcertain non-core legacy activities. Through more optimal
resource allocation and cost control, enhanced programme
execution and stronger development of more profitablesegments, EADS will strive to establish a level of profitability
that is both attractive to its shareholders and sufficient tofund its future development initiatives;

O Focus on the environment. EADS will seek to anticipate
and address future environmental challenges as part ofits commitment to reconciling environmental responsibility
with economic success. Being greener, cleaner, quieter
and smarter, the A380 has already set new standards
for air transport and the environment. EADS will pursue
additional initiatives in the future – including a comprehensive
environmental management system based on ISO 14001 tocover all EADS activities – in order to render eco-efficiency acompetitive advantage over the long-term; andO Expand its services offering. Historically, EADS’ growthhas been driven by the sale of technologically advanced
products and solutions. At the same time, management
is focused on increasing EADS’ presence in the highvalue services market, given its countercyclical nature andO Develop its people. EADS needs motivated and competentemployees. EADS’ leadership culture is based on mutual
trust, empowerment, recognition and accountability.
Employee development is a core activity of EADS managers.
To this end, it is the duty of EADS and its management

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to provide employees with the opportunities to meet theirprofessional expectations, develop their professional skills
and realise their personal potential. This requires active
management development based on a new leadershipmodel. EADS will also encourage stronger mobility andgreater internal diversity in its teams.

Organisation of EADS Businesses
EADS organises its businesses into the following four operating
Divisions: (1) Airbus (including Airbus Commercial and Airbus
Military), (2) Eurocopter, (3) Astrium and (4) Cassidian. The chart
set out in “General Description of the Company and its Share
Capital — 3.3.6 Simpliﬁed Group Structure Chart” illustrates the
allocation of activities among these four Divisions.

AirbusAirbus is one of the world’s leading aircraft suppliers, with a
mission to provide aircraft best suited to the market’s needs andto support these aircraft with the highest quality of service. The
Airbus commercial product line comprises aircraft that range insize from the 107-seat single-aisle A318 aircraft to the 525-seat
A380 widebody aircraft. Airbus also continues to broaden its
scope and product range by applying its expertise to the military
market, as well as extending its portfolio of freighter aircraft.
In 2011, Airbus recorded total revenues of € 33.1 billion –including total revenues of € 2.5 billion at Airbus Military –representing 67.4% of EADS’ revenues.

Airbus Commercial
Since it was founded in 1970 and up to the end of 2011,
Airbus has received orders for 11,479 commercial aircraftfrom approximately 334 customers around the world. With
534 aircraft deliveries in 2011 (510 in 2010), Airbus was thelargest supplier of commercial aircraft in the world for the ninth
consecutive year. Airbus received 1,608 gross orders in 2011
(compared to 644 gross orders in 2010), or 56% of the grossworldwide market share (in value terms) of aircraft with morethan 100 seats. After accounting for cancellations, net orderintake for 2011 was 1,419 aircraft (compared to 574 aircraft in2010). As of 31 December 2011, Airbus’ backlog of commercial
orders was 4,437 aircraft (compared to 3,552 aircraft in 2010).
See “— 1.1.2 Airbus — Airbus Commercial”.

Airbus Military
Airbus Military produces and sells special mission aircraft,which are derived from existing aircraft platforms and are
dedicated to specialised military and security tasks suchas in-ﬂight refuelling capabilities, maritime surveillance andantisubmarine warfare. Airbus Military also manufacturesand sells light and medium military transport aircraft and is
responsible for the European heavy military transport A400M
project. See “— 1.1.2 Airbus — Airbus Military”.

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medium-heavy helicopters which are adaptable to all kinds of
mission types based on customer needs.
Eurocopter delivered 503 helicopters in 2011 (527 in 2010),
including the 1,000th Dauphin and the 1,000th EC135 helicopter.
Eurocopter received 472 gross orders in 2011 (compared to
395 gross orders in 2010). After accounting for cancellations,net order intake for 2011 was 457 helicopters (compared to
346 helicopters in 2010). Civil contracts accounted for 68% of thisorder volume, with military sales representing the remaining 32%.
As of 31 December 2011, Eurocopter’s backlog of helicopter
orders was 1076 aircraft (compared to 1,122 aircraft in 2010).
In 2011, Eurocopter recorded total revenues of € 5.4 billion,
representing 11.0% of EADS’ revenues. See “— 1.1.3 Eurocopter”.

Astrium
Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin
and the leading European supplier of satellites, orbital
infrastructures, launchers and associated services. Astrium
has three main Business Units: Astrium Satellites, Astrium
Space Transportation and Astrium Services. These Business
Units include the provision of launch services through Astrium’s
shareholdings in Arianespace (Ariane 5 launcher), Starsem(Soyuz launcher) and Eurockot (Rockot launcher), as well as
services related to telecommunication and Earth observation
satellites through wholly or majority owned subsidiaries such as
Paradigm Secure Communications, Infoterra and Spot Image.
In 2011, Astrium recorded total revenues of € 5.0 billion,
representing 10.1% of EADS’ revenues. See “— 1.1.4 Astrium”.

CassidianCassidian is a worldwide leader in global security solutions andsystems, providing lead systems integration and value-added
products and services to civil and military customers around theglobe: air systems (combat aircraft, military transport, mission
aircraft and unmanned aerial systems), land, naval and joint
systems, intelligence and surveillance, cyber security, securecommunications, test systems, missiles, services and support
solutions. As a lead systems integrator, Cassidian combines theknow-how to design, develop and implement overall systemsolutions by integrating across platforms, equipment and services.
In 2011, Cassidian recorded total revenues of € 5.8 billion,
representing 11.8% of EADS’ revenues. See “— 1.1.5 Cassidian”.

Other Businesses
Other Businesses include turboprop manufacturer ATR,
aerostructure and aircraft seat business Sogerma, US operating
unit EADS North America and 30% (consolidated at equity) ofDaher-Socata. Other Businesses do not form part of EADS’ four
Divisions. In 2011, the recorded total revenues of Other Businesses
amounted to € 1.3 billion. See “— 1.1.6 Other Businesses”.

Eurocopter

Investments

Eurocopter is a global leader in the civil and military helicopter
market, offering one of the most complete and modern rangesof helicopters and related services. This product range currently
includes light single-engine, light twin-engine, medium andAmong its signiﬁcant investments, EADS holds a 46.3% stakein Dassault Aviation, a major participant in the world market for
military jet aircraft and business jets. See “— 1.1.7 Investments”.

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Summary Financial and Operating Data
The following tables provide summary ﬁnancial and operating data for EADS for the past three years.

Consolidated Revenues by Division for the years ended 31 December 2011, 2010 and 2009
Year ended 31 December 2011

Airbus (2)Airbus Commercial
Airbus Military
Eurocopter

Year ended 31 December 2010

Year ended 31 December 2009

In percentage (1)Amount in €bn

In percentage (1)

33.1

67.1%

30.0

31.2

63.2%

27.7

Amount in €bn

Amount in €bn

In percentage (1)

65.5%

28.1

65.6%

60.5%

26.4

61.6%

2.5

5.1%

2.7

5.9%

2.2

5.2%

5.4

11.0%

4.8

10.6%

4.6

10.7%

Astrium

5.0

10.1%

5.0

10.9%

4.8

11.2%

Cassidian

5.8

11.8%

5.9

13.0%

5.3

12.5%

Total Divisional revenues

49.3

100%

45.7

100%

42.8

100%

Other Businesses

1.2

1.2

1.1

HQ/Consolidation (3)

(1.4)

(1.1)

(1.1)

Total

49.1

45.8

42.8

(1) Before “Other Businesses” and “HQ/Consolidation”.
(2) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.
(3) HQ/Consolidation includes, in particular, adjustments and eliminations for intercompany transactions.

Consolidated Revenues by Geographical Area for the years ended 31 December 2011, 2010 and 2009
Year ended 31 December 2011
Amount in €bn

In percentage

Year ended 31 December 2010

(1)

Amount in €bn

In percentage

Year ended 31 December 2009
(1)

Amount in €bn

In percentage (1)Europe

20.7

42.1%

21.4

46.8%

21.4

50.1%

North America

5.8

11.9%

3.5

7.6%

6.1

14.3%

Asia/Pacific

14.3

29.1%

11.4

24.8%

8.6

20.1%

Rest of the World (2)

8.3

16.9%

9.5

20.8%

6.7

15.5%

Total

49.1

100%

45.8

100%

42.8

100%

(1) Percentage of total revenues after eliminations.
(2) Including the Middle East.

Consolidated Orders Booked for the years ended 31 December 2011, 2010 and 2009
Year ended 31 December 2011

Year ended 31 December 2010

(1)

Amount in €bn

117.9

90%

117.3
0.9

Amount in €bnYear ended 31 December 2009
(1)

Amount in €bn

In percentage (1)

68.2

83%

23.9

52%

90%

68.2

83%

23.5

51%

1%

0.2

0%

0.6

1%

In percentage

In percentage

Orders booked (2)Airbus (3) (4)Airbus Commercial
Airbus Military
Eurocopter

4.7

4%

4.3

5%

5.8

13%

Astrium

3.5

3%

6.0

7%

8.3

18%

CassidianTotal Divisional orders

4.1

3%

4.3

5%

8.0

17%

130.2

100%

82.8

100%

46.0

100%

Other Businesses

2.0

1.7

0.9

HQ/Consolidation

(1.2)

(1.4)

(1.1)

131.0

83.1

45.8

Total
(1)
(2)
(3)
(4)

Before “Other Businesses” and “HQ/Consolidation”.
Without options.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.

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Consolidated Backlog for the years ended 31 December 2011, 2010 and 2009 (1)Year ended 31 December 2011

BacklogYear ended 31 December 2010

Amount in €bn

In percentage (2)Amount in €bn

In percentage (2)

495.5

92%

400.4

475.5

88%

378.9

Year ended 31 December 2009
Amount in €bn

In percentage (2)

89%

339.7

87%

85%

320.3

82%

(3)

Airbus (4) (5)Airbus Commercial
Airbus Military

21.3

4%

22.8

5%

20.7

5%

13.8

2%

14.5

3%

15.1

4%

Astrium

14.7

3%

15.8

4%

14.6

4%

Cassidian

15.5

3%

16.9

4%

18.8

5%

Total Divisional backlog

539.5

100%

447.6

100%

388.2

100%

Eurocopter

Other Businesses
HQ/Consolidation
Total
(1)
(2)
(3)
(4)
(5)

3.0

2.5

2.0

(1.5)

(1.6)

(1.1)

541.0

448.5

389.1

For a discussion on the calculation of backlog, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 2.1.3.1 Order Backlog”.
Before “Other Businesses” and “HQ/Consolidation”.
Without options.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.

Relationship between EADS N.V.
and the GroupEADS N.V. itself does not engage in the core aerospace,defence or space business of its Group but coordinates related
businesses, sets and controls objectives and approves majordecisions for its Group. As the parent company, EADS N.V.
conducts activities which are essential to the Group activities
and which are an integral part of the overall management of theGroup. In particular, ﬁnance activities pursued by EADS N.V. arein support of the business activities and strategy of the Group.
In connection therewith, EADS N.V. provides or procures theprovision of services to the subsidiaries of the Group. Generalmanagement service agreements have been put in place withthe subsidiaries and services are invoiced on a cost plus basis.
For management purposes, EADS N.V. acts through its Boardof Directors, Executive Committee, and Chief Executive Ofﬁcer
in accordance with its corporate rules and procedures detailed
in “Corporate Governance”.
Within the framework deﬁned by EADS, each Division,
Business Unit and subsidiary is vested with full entrepreneurial
responsibility.

1.1.2 Airbus
Airbus is one of the world’s leading aircraft suppliers, with a
mission to provide aircraft best suited to the market’s needs
and to support these aircraft with the highest quality of service.
The Airbus commercial product line comprises aircraft that
range in size from the 107-seat single-aisle A318 aircraft tothe 525-seat A380 widebody aircraft. Airbus also continues tobroaden its scope and product range by applying its expertiseto the military market, as well as extending its portfolio of
freighter aircraft.
In 2011, Airbus recorded total revenues of € 33.1 billion –including total revenues of € 2.5 billion at Airbus Military –representing 67.4% of EADS’ revenues.

Airbus Commercial
Introduction and Overview
Since it was founded in 1970 and up to the end of 2011,
Airbus has received orders for 11,479 commercial aircraftfrom approximately 334 customers around the world. With
534 aircraft deliveries in 2011 (510 in 2010), Airbus was thelargest supplier of commercial aircraft in the world for the ninth
consecutive year. Airbus received 1,608 gross orders in 2011
(compared to 644 gross orders in 2010), or 56% of the grossworldwide market share (in value terms) of aircraft with morethan 100 seats. After accounting for cancellations, net orderintake for 2011 was 1,419 aircraft (compared to 574 aircraft in2010). As of 31 December 2011, Airbus’ backlog of commercial
orders was 4,437 aircraft (compared to 3,552 aircraft in 2010).

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Building a Leaner, More Fully Integrated Company

are expected to constitute the second and fourth mostimportant markets for aircraft deliveries respectively, in the next
twenty years. As a result, Airbus has sought to strengthen its
commercial and industrial ties in these countries. New aircraft
demand from airlines in the Middle East has also become
increasingly important, as they have rapidly executed strategies
to establish themselves with a global presence and to leverage
the beneﬁts the region can deliver.

In order to build a leaner, more fully integrated company andthereby bolster its competitiveness, Airbus continues to workon implementation of the transformation programme referred toas “Power8 Plus”. In addition to modules aimed at simplifying
governance and improving decision-making processes,
Power8 Plus also comprises modules targeting performanceand efﬁciency gains within key programmes. The “Single-Aisle
Cost Optimisation” module (SCOPE) is one such example.

The no-frills/low-cost carriers also constitute a signiﬁcantsector, and are expected to continue growing around the world,
particularly in Asia, where emerging markets and continued
deregulation should provide increased opportunities. While
Airbus single-aisle aircraft continue to be a popular choice forthese carriers, demand for Airbus’ range of twin-aisle aircraft
may also increase as some of these carriers begin testing themarket with new long-range operations.

Developing the Most Comprehensive Line of Products in
Response to Customer Needs

Overall Growth. The long-term market for passenger aircraft
depends primarily on passenger demand for air travel, which isitself primarily driven by economic or GDP growth, fare levels
and demographic growth. Measured in revenue passenger
kilometres, air travel increased every year from 1967 to 2000,
except for 1991 due to the Gulf War, resulting in an averageannual growth rate of 7.9% for the period. Demand for airtransportation also proved resilient in the years following 2001,
when successive shocks, including 9/11 and SARS in Asia,
dampened demand. Nevertheless, the market quickly recovered.

Airbus’ primary goal is to deliver strong results in a sustainedmanner, while commanding between 40% and 60% of theworldwide commercial aircraft market over the long-term andexpanding its customer services offering. To achieve thesegoals, Airbus is actively:

Airbus continuously seeks to develop and deliver new products
to meet customers’ evolving needs, while also improving its
existing product line. For example, the A320neo (new engine
option) is the latest of many upgrades to the A320 family inorder to respond to strong market demand for fuel efﬁcient
aircraft and increased competition in the single-aisle market.
Airbus is also currently pursuing (i) development and production
on the new A350 XWB programme, (ii) the gradual expansion of
relevant freighter applications with the A330-200F, (iii) additional
opportunities in the military business through the A400M
and military derivatives products such as the A330 MRTT
(see “— Airbus Military” below), and (iv) research on thedevelopment of new aircraft in the short- and medium-range
segments.

Expanding its Customer Services Offering
Airbus seeks to remain at the forefront of the industry by
expanding its customer services offering to meet customers’
evolving needs. As a result, Airbus has developed a wide rangeof value-added and customised services which customers
can select based on their own outsourcing policy and needs.
This approach provides Airbus operators with solutions tosigniﬁcantly reduce their operating costs, increase aircraft
availability and enhance the quality of their operations.

MarketCyclicality and Market Drivers
The main factors affecting the commercial aircraft market
include passenger demand for air travel, cargo activity,
economic growth cycles, national and international regulation(and deregulation), the rate of replacement and obsolescenceof existing ﬂeets and the availability of aircraft ﬁnancing sources.
The performance, competitive posture and strategy of aircraft
manufacturers, airlines, cargo operators and leasing companies
as well as wars, political unrest, pandemics and extraordinary
events may also precipitate changes in demand and lead toshort-term market imbalances.
In recent years, China and India have emerged as signiﬁcant
new aircraft markets. According to internal estimates, they
28 I EADS REGISTRATION DOCUMENT 2011

More recently, the ﬁnancial crisis and global economic
difﬁculties witnessed at the end of 2008 and into 2009 resulted
in only the third period of negative trafﬁc growth during the jetage, and a cyclical downturn for airlines in terms of trafﬁc (bothpassenger and cargo), yields and proﬁtability. By the end of2010 however, trafﬁc had recovered strongly from 2009 levels,with trafﬁc growth expected to be above the long-term trend for2011 upon the release of ofﬁcial ﬁgures.
Beyond the near-term market uncertainties driven by thesovereign debt crisis in Europe and based on internal estimates,
Airbus believes that air travel remains a growth business and willgrow at 4.8% per annum during the period 2011-2030. Airbus
therefore expects passenger trafﬁc, as measured in revenue
passenger kilometres, to more than double in the next twenty
years.
Cyclicality. Despite the expected overall long-term growth in
air travel, the market for commercial aircraft has proven to be
cyclical, due to the volatility of airline proﬁtability, cyclicality of
the world economy and occasional unforeseen events which
can further depress demand for air travel, such as the spread of
H1N1 ﬂu. Accordingly, following the peak in new orders reachedin 2007, Airbus recorded signiﬁcantly fewer new orders in 2008
and 2009 as a result of the cyclical downturn. In 2010 and 2011,
the rebound in passenger trafﬁc, improved yields and higher
load factors helped support a cyclical recovery among airlines
globally, which in turn was reﬂected in increased orders as well
as record deliveries over these years.
When cyclical downturns do occur, aircraft manufacturers
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postpone or cancel their existing orders. In the past this has
generally been followed by a period of sustained new orderand delivery activity. However, as with any macro-economic
development, it is difﬁcult to predict how the current recovery
and the next cycle will develop.
Regulation/Deregulation. National and international regulation(and deregulation) of international air services and majordomestic air travel markets affect demand for passenger
aircraft as well. In 1978, the US deregulated its domestic airtransportation system, followed by Europe in 1985. The more
recently negotiated “Open Skies Agreement” between the
US and Europe, which became effective in 2008, allows any
European or US airline to ﬂy any route between any city in the
EU and any city in the US. Other regions and countries arealso progressively deregulating, particularly in Asia. This trend
is expected to continue, facilitating and in some cases driving
demand. In addition to providing greater market access (which
may have formerly been limited), deregulation may allow for
the creation and growth of new airlines or new airline models,
as has been the case with the no-frills/low-cost airline model,
which has increased in importance throughout major domestic
and intra-regional markets since deregulation (e.g., in the US
and Europe).
Airline Network Development:“Hub” and “Point-to-Point”
Networks. Following deregulation, major airlines have sought
to tailor their route networks and ﬂeets to continuing changes
in customer demand. Accordingly, where origin and destination
demand prove sufﬁciently strong, airlines often employ direct,
or “point-to-point” route services. However, where demand
between two destinations proves insufﬁcient, airlines havedeveloped highly efﬁcient “hub and spoke” systems, which
provide passengers with access to a far greater number of air
travel destinations through one or more ﬂight connections.
The chosen system of route networks in turn affects aircraft
demand, as hubs permit ﬂeet standardisation around both
smaller aircraft types for the short, high frequency and lower
density routes that feed the hubs (between hubs and spokes)
and larger aircraft types for the longer and higher density routes
between hubs (hub-to-hub), themselves large point-to-point
markets. As deregulation has led airlines to diversify their route
network strategies, it has at the same time therefore encouraged
the development of a wider range of aircraft in order to implement
such strategies (although the trend has been towards larger-sizedaircraft within each market segment as discussed below).
Airbus, like others in the industry, believes that route networks
will continue to grow through expansion of capacity on existing
routes and through the introduction of new routes, which will
largely be typiﬁed by having a major hub city at least at one
end of the route. These new route markets are expected to bewell served by Airbus’ latest product offering, the A350 XWB.
In addition, the A380 has been designed primarily to meet thesigniﬁcant demand between the major hub cities, very often
also the major centres of population such as London, Paris,
New York and Beijing for example. Airbus has identiﬁed 32
such cities in its market analysis. Airbus believes that it is well
positioned to meet current and future market requirements
given its complete family of products.

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Alliances. The development of world airline alliances has
reinforced the pattern of airline network development describedabove. According to data from Ascend, a UK-based aviationindustry consultancy, approximately one third of the world’s
jetliner seats being ﬂown today are operated by just 15 airlines
as of January 2012. In the 1990s, the major airlines began toenter into alliances that gave each alliance member access tothe other alliance members’ hubs and routings, allowing airlines
to concentrate their hub investments while extending theirproduct offering and market access. Airlines have also begun to
explore different merger possibilities in recent years. Examples
include the merger of Air France and KLM, Delta and Northwest
and United and Continental, with talks between other airlines
currently on-going.

Market Structure and Competition
Market Segments. According to a study conducted by Airbus,
a total of 15,000 passenger aircraft with more than 100 seats
were in service with airlines worldwide at the beginning of 2011(as compared to 14,240 passenger aircraft at the beginning of2010). Currently, Airbus competes in each of the three principal
market segments for aircraft with more than 100 seats.
“Single-aisle” aircraft, such as the A320 family, have 100-210
seats, typically conﬁgured with two triple seats per row divided
by one aisle, and are used principally for short-range andmedium-range routes.
“Twin-aisle” or “wide-body” aircraft, such as the A330/
A350 XWB families, have a wider fuselage with more than 210
seats, typically conﬁgured with eight seats per row and with twoaisles. The A330/A350 XWB families are capable of serving all
short to long-range markets.
“Very large aircraft”, such as the A380 family, are designed
to carry more than 400 passengers, non-stop, over very
long-range routes with superior comfort standards and withsigniﬁcant cost-per-seat beneﬁts to airlines, although suchaircraft can also be used over shorter ranges in high-density(including domestic) markets. Freight aircraft, which form afourth, related segment, are often converted ex-passenger
aircraft. See “— 1.1.7 Investments — Aerostructures, Aircraft
Conversion and Floor Panels — EFW”.
Airbus also competes in the corporate, VIP business jet market
with the ACJ, an A319-based Corporate Jetliner, and theA318 Elite. It has also recently sold the A320 and A380 to serve
the business jet market in private, corporate shuttle and ingovernment/VIP roles.
Geographic differences. The high proportion of single-aisle
aircraft in use in both North America and Europe reﬂects the
predominance of domestic short-range and medium-range
ﬂights, particularly in North America due to the development ofhubs following deregulation. In comparison with North America
and Europe, the Asia-Paciﬁc region uses a greater proportion oftwin-aisle aircraft, as populations tend to be more concentrated
in fewer large urban centres. The tendency towards use oftwin-aisle aircraft is also reinforced by the fact that many of theregion’s major airports limit the number of ﬂights, due either
to environmental concerns or to infrastructure constraints that
limit the ability to increase ﬂight frequency. These constraints

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However, Airbus believes that demand for single-aisle aircraft in
Asia will grow over the next 20 years, particularly as domestic
markets in China and India and low-cost carriers continue todevelop in the region. Aircraft economics will also help to drive
aircraft size, with airlines looking to reduce the cost per seatthrough higher density aircraft cabins and the use of larger
aircraft types and variants where possible.
Competition. Airbus has been operating in a duopoly since
Lockheed’s withdrawal from the market in 1986 and Boeing’s
acquisition of McDonnell Douglas in 1997. As a result, themarket for passenger aircraft of more than 100 seats is now
effectively divided between Airbus and Boeing. According to the
manufacturers’ published ﬁgures, in 2011 Airbus and Boeing,respectively, accounted for 53% and 47% of total deliveries,
64% and 36% of total net orders (in units), and 54% and 46% of
the total year-end backlog (in units).
Nevertheless, the high technology and high value natureof the business makes aircraft manufacturing an attractive
industry in which to participate, and besides Boeing, Airbus
faces aggressive international competitors who are intent on
increasing their market share. Regional jet makers Embraer andBombardier, coming from the less than 100-seat commercial
aircraft market, continue to develop larger airplanes (such as
the new 100- to 149-seat C-Series launched by Bombardier).
Additionally, other competitors from Russia, China and Japan
will enter the 70- to 150-seat aircraft market over the next few
years.

Customers
As of 31 December 2011, Airbus had 334 customers, 6,645
Airbus aircraft had been delivered to operators worldwide
since the creation of Airbus, and 4,437 aircraft were on order.
The table below shows Airbus’ largest commitments in termsof total gross ﬁrm orders by customer for the year 2011.
Customer

Firm orders (1)Air Asia

200

Indigo180

Qantas

110

ILFC

100

Go Air

72

Gecas

60

Republic Airways

60(1) Options are not included in orders booked or year-end backlog.

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Products and Services
The Family Concept — Commonality across the Fleet
Airbus’ aircraft families promote ﬂeet commonality. Thisphilosophy takes a central aircraft and tailors it to create
derivatives to meet the needs of speciﬁc market segments,
meaning that all new-generation Airbus aircraft share the same
cockpit design, ﬂy-by-wire controls and handling characteristics.
Pilots can transfer among any aircraft within the Airbus familywith minimal additional training. Cross-crew qualiﬁcation acrossfamilies of aircraft provides airlines with signiﬁcant operational
ﬂexibility. In addition, the emphasis on ﬂeet commonality permits
aircraft operators to realise signiﬁcant cost savings in crew
training, spare parts, maintenance and aircraft scheduling.
The extent of cockpit commonality within and across familiesof aircraft is a unique feature of Airbus that, in management’s
opinion, constitutes a sustainable competitive advantage.
In addition, technological innovation has been at the core of
Airbus’ strategy since its creation. Each product in the Airbus
family is intended to set new standards in areas crucial toairlines’ success, such as cabin comfort, cargo capacity
performance, economic performance, environmental impact
and operational commonality. Airbus innovations often provide
distinct competitive advantages, with many becoming standard
in the aircraft industry.
A320 family. Airbus’ family of single-aisle aircraft, based on theA320, includes the A318, A319 and A321 derivatives, as wellas the A319-based Airbus Corporate Jetliner and A318 Elitebusiness jet. Each aircraft in the A320 family shares the same
systems, cockpit, operating procedures and cross-section.
The A320 family covers the market from 100 to 220 seats, ﬂying
routes up to 3,700 nm/6,800 km.
At 3.96 metres diameter, the A320 family has the widest
fuselage cross-section of any competing single-aisle aircraft.
This provides a roomy passenger cabin, a high comfort
level and a more spacious under ﬂoor cargo volume than its
competitors. The A320 family incorporates digital ﬂy-by-wire
controls, an ergonomic cockpit and a lightweight carbon ﬁbre
composite horizontal stabiliser. The use of composite material
has also been extended to the vertical stabiliser. The A320
family’s competitor is the Boeing 737 series.
With more than 8,292 aircraft sold and 4,829 currently inservice, the A320 family has proven extremely popular withcustomers, offering high standards of cabin comfort, technology
and economic performance. Its success with low-cost airlines
in particular demonstrates the economic appeal of the A320
family.
Airbus continues to invest in the A320 family, introducing
enhancements and new technology to maintain the aircraft’s
appeal to customers. In 2011, Airbus completed the ﬁrst test
ﬂight of an A320 development aircraft using new fuel-saving“sharklet” wingtip devices. These devices cut down on

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aerodynamic drag by helping reduce the spiral-shaped
vortices that are formed at the wingtips of aircraft during ﬂight.
As a result, they are expected to result in around 3.5% reduced
fuel burn over long sectors as well as increased payload-range
and improved take-off performance. Introduced as an option
for customers, the ﬁrst A320 ﬁtted with sharklets is expected toenter into service at the end of 2012.

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the A320neo is designed to deliver fuel savings of 15%(including
sharklets) as well as an additional ﬂight distance of 500nm(950 km) or two tonnes more payload at a given range.
This new engine option will be available for the A321, A320 and
A319 aircraft models, with an entry into service targeted for
October 2015.
In 2011, Airbus received 1,470 gross orders for the A320 familyof aircraft (1,348 net), and delivered 421 to customers.

In addition, Airbus began offering new fuel saving engines as an
option on its A320 family at the end of 2010. With 95% airframe
commonality with the existing models of the A320 family,
A320 Family Technical Features (standard version)
Model (1)Entry into service

Passenger capacity (1)Maximum range (km)Length (metres)

Wingspan (metres)

A318

2003

107

6,000

31.4

34.1

A319

1996

124

6,800

33.8

34.1

A320

1988

150

5,900

37.6

34.1

A321

1994

185

5,950

44.5

34.1

(1) Two-class layout.

A330 family. With 1,186 aircraft sold and 831 currently inservice, the A330 family covers all market segments with one
twin-engine aircraft type and is designed to carry between 250
and 300 passengers. The combination of low operating costs,
high efﬁciency, ﬂexibility and optimised performance makes
the twin-engine A330 popular with an ever-increasing operator
base. The A330 family offers high levels of passenger comfort
as well as large under-ﬂoor cargo areas. The competitors of theA330 family are the Boeing 767, 777 and 787 aircraft series.

Airbus has also developed a new dedicated cargo variant of
the A330 family, the A330-200F, a mid-size long-range cargo
aircraft that is designed to respond to the current market
dynamics of rising fuel prices and increased pressure on
yields. Since entering into service in 2010, the A330-200F has
demonstrated its attractiveness as an efﬁcient, reliable andproﬁtable freighter.
In 2011, Airbus received 99 gross orders for the A330 family of
aircraft (85 net), and delivered 87 to customers.

A330 Family Technical Features
Model (1)Entry into service

Passenger capacity (1)Maximum range (km)Length (metres)

Wingspan (metres)

A330-200

1998

253

13,40059.0

60.3

A330-300

1994

295

10,80063.7

60.3(1) Three-class layout.

A340 family. Airbus decided to terminate the A340 programmein November 2011, although it continues to support the existing
ﬂeet of aircraft around the world. With 377 aircraft sold and 364
currently in service, the four-engine A340 combines outstanding
range, excellent performance and high efﬁciency for airlines.

each airline. Carrying 525 passengers in a comfortable threeclass conﬁguration and with a range of 8,300 nm/15,400 km,
the A380 offers superior economic performance, lower fuelconsumption, less noise and reduced emissions. The A380’s
competitor is the 400-seat Boeing 747-8.

A380. The double-deck A380 is the world’s largest commercial
aircraft. Its cross-section provides ﬂexible and innovative
cabin space, allowing passengers to beneﬁt from wider seats,
wider aisles and more ﬂoor space, tailored to the needs of

In 2011, the A380’s customer base increased by 2 new airlines:
Asiana Airlines of South Korea and Japan’s Skymark Airlines.
Airbus received 29 gross orders for the A380 in 2011 (19 net),and delivered 26 to customers.

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A380 Technical Features
Model (1)Entry into service

Typical capacity (1)Maximum range (km)Length (metres)

Wingspan (metres)

2007

525

15,40073.0

79.8

A380-800(1) Three-class layout.

New Product Development

A350 XWB-900 progressed across all pre-ﬁnal assembly sites,with the ﬁrst major airframe sections delivered to the A350 XWB
ﬁnal assembly line in Toulouse at the end of 2011.

A350 XWB family. The A350 XWB family is an all new familyof mid-sized wide-body aircraft, designed to accommodate
between 270 and 350 passengers. The A350 XWB features
A380 technology, a wider fuselage than that of competing new
generation aircraft, and a greater use of composite material.
The A350 XWB’s main competitors are the Boeing 787 and
777 aircraft series.

Following a review of the A350 XWB-900 programme in thesecond half of 2011, Airbus has decided to prioritise A350 XWB
ramp-up maturity over schedule. Entry into service is currently
targeted for the ﬁrst half of 2014.
In 2011, Airbus received 10 gross orders for the A350 XWB (-31net), for a total of 555 ﬁrm orders from 34 customers at the endof the year.

In 2011, the A350 XWB programme entered into the
manufacturing phase. Manufacturing and pre-assembly of theA350 XWB Family Technical Features
Model (1)Entry into service

Passenger capacity (1)Maximum range (km)Length (metres)

Wingspan (metres)

A350 XWB-800

2016

270

15,70061.0

64.0

A350 XWB-900

2014

314

15,00067.3

64.0

A350 XWB-1000

2017

350

15,60074.0

64.0(1) Three-class layout.

A400M. For information related to the A400M programme, see“— Airbus Military” below.

Customer Services
Airbus Customer Services’ prime role is to help its customers
operate their Airbus ﬂeet safely and proﬁtably and to thesatisfaction of passengers. As a result of its continued growth,
Airbus’ customer base has increased consistently over the past
years.
A team of more than 4,000 people cover all areas of support
from technical engineering/operational assistance and spareparts supply, to crew and personnel training. Hundreds oftechnical specialists provide advice and assistance to Airbus
customers 24 hours a day, 7 days a week. There are over 243
customer support representatives positioned around the world
in more than 163 stations close to the airlines they serve, andan international network of support centres, training centres andspares’ stores.
Beyond the core customer support activities, Airbus Customer
Services department has developed a wide range of modular
and customised services driven by the unique added value thatan aircraft manufacturer can bring. These services are clusteredaround four main domains of activity: ﬂy-by-the-hour services,material management, systems and cabin upgrade, and training
and ﬂight operations. Innovative and integrated solutions havebeen developed in these domains, such as the Flight Hour
Services Component programme (FHS Component) andTailored Support Package (FHS TSP), which provide integrated

32 I EADS REGISTRATION DOCUMENT 2011engineering/maintenance and component packages to enable
customers to reduce their investments and support costs while
increasing operational reliability. Similar integrated solutions
have also been developed in system and cabin upgrade.
Part of Airbus’ growth strategy in the area of customer services
consists of targeted acquisitions, such as that of Satair(completed in October 2011). This Copenhagen-based company
distributes aircraft spare parts worldwide, mostly throughexclusive distribution deals with manufacturers of the original
equipment.

Customer Finance
Airbus favours cash sales, and does not envisage customer
ﬁnancing as an area of business development. However, Airbus
recognises the commercial need for manufacturers to assist
customers in arranging ﬁnancing of new aircraft purchases, andin certain cases to participate in ﬁnancing those aircraft for theairline.
Extension of credit or assumption of exposure is subject tocorporate oversight and monitoring, and follows strict standardsof discipline and caution. Airbus’ dedicated customer ﬁnanceteam has accumulated decades of expertise in aircraft ﬁnance.
When Airbus ﬁnances a customer, the ﬁnanced aircraft generally
serve as collateral, with the engine manufacturer participatingin the ﬁnancing. These elements assist in reducing the risk
borne by Airbus. Airbus’ customer ﬁnancing transactions aredesigned to facilitate subsequent sell-down of the exposure to
the ﬁnancial markets, third party lenders or lessors.

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In 2011, Airbus was able to begin taking advantage of improved
ﬁnancing markets by selling down more exposure than it
added. The markets, however, remain unpredictable and Airbus
continues to allow for potential additional ﬁnancing exposure.
Management believes, in light of its experience, that the level ofprovisioning protecting Airbus from default costs is adequate
and consistent with standards and practice in the aircraft
ﬁnancing industry. See “Management’s Discussion and Analysisof Financial Condition and Results of Operations”.

Asset Management
The Airbus Asset Management Division was established in
1994 to manage and re-market used aircraft acquired by
Airbus, originally as a result of customer bankruptcies, andsubsequently in the context of certain buy-back commitments.
The Division operates with a dedicated staff and manages aﬂeet comprised of Airbus aircraft across the range of models.
Through its activities, the Asset Management Division helps
Airbus respond more efﬁciently to the medium- and long-term
ﬂeet requirements of its customers.
Its key roles comprise commercial and risk management of the
Airbus portfolio of used aircraft. Most of the aircraft are available
to customers for cash sale, while some can only be offered on
operating lease, depending on the ﬁnancing attached to suchaircraft. At the end of 2011, the Airbus Asset Management
portfolio contained 17 aircraft, a net increase of one aircraftfrom 2010. The Asset Management Division also provides a fullrange of remarketing services, including assistance with entry
into service, interior reconﬁguration and maintenance checks.

Production
Industrial Organisation
Each task in the building of Airbus aircraft (from design toproduction) is allocated to a designated centre of excellence(“CoE”). The CoEs are organised around different aircraft
sections, i.e. Fuselage/Cabin, Wing/Pylon and Empennage/
Aft Fuselage, with one transversal CoE focused on Industrial
Processes and Aerostructures. The transversal CoE is in chargeof ensuring that harmonised and standardised processes,
methods and tools are selected and implemented across theCoEs, in order to increase efﬁciency.
Following production by the respective CoEs, the various
aircraft sections are transferred between the network of sites
and the ﬁnal assembly lines using dedicated transport means,such as the “Beluga” Super Transporters. To support the A380
production ﬂow, Airbus has also integrated road, river and sea
transport. Programme management is then responsible forthe ﬁnal assembly line activities. The programme management
works closely with the CoEs to secure delivery of aircraft
sections to the ﬁnal assembly lines on time, cost and quality.
Following the reorganisation of aerostructure activities initiatedunder Power8, two new entities, Premium AEROTEC GmbHand Aerolia S.A., commenced full operations on 1 January
2009 under EADS ownership. They are major players on the
global aerostructure market. See “— 1.1.7 Investments —Aerostructures, Aircraft Conversion and Floor Panels — Aerolia”
and “– Premium AEROTEC”.

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Engineering
Airbus Engineering is a global organisation that develops
complete aircraft and aircraft components and conducts
research that can be applied to the next generation of aircraft.
The Centres of Competences and centres of excellence thatmake up Airbus Engineering operate transnationally, with mostengineers employed at four Airbus sites in France, Germany, theUK and Spain. A growing population of experienced aerospaceengineers worldwide are employed at ﬁve further engineering
centres in Wichita (Kansas, US), Mobile (Alabama, US), Moscow(Russia), Bangalore (India) and Beijing (China). A key part of the
Airbus engineering organisation is the architect and integration
centre, which ensures, together with a team of senior aircraftarchitects and the programme chief engineers, that a consistentand multi-disciplinary approach is applied during aircraft
development.
In 2011, Airbus Engineering performed a successful ﬂight test
programme for the A400M and made continued progress
towards A400M type certiﬁcation. The A350 XWB programme,
despite a shifting of the entry into service as discussed above,
made further progress, with the iron bird integration test rig andfurther integration test benches put into operation, as well as
the delivery of the ﬁrst aircraft sections to the ﬁnal assembly line.
Finally, Airbus Engineering contributed to the achievement of theﬁrst development milestones for the A320neo and the ﬁrst test
ﬂight of an A320 development aircraft equipped with sharklets.

Targeted Deliveries in 2012
Airbus delivered 534 aircraft in 2011 (compared to 510 in2010) and is targeting approximately 570 aircraft deliveries in2012. Any major production or market disruption or economic
downturn could lead to revision of these ﬁgures.

Airbus Military
Introduction and Overview
Airbus Military produces and sells special mission aircraft,which are derived from existing aircraft platforms and are
dedicated to specialised military and security tasks suchas in-ﬂight refuelling capabilities, maritime surveillance andantisubmarine warfare. Airbus Military also manufacturesand sells light and medium military transport aircraft and is
responsible for the European heavy military transport A400M
project.
In 2011, Airbus Military recorded total revenues of € 2.5 billion.

Strategy
Airbus Military’s strategy is to further develop its corebusinesses and increase market share by leveraging EADS’technology know-how, while at the same time enhancing
proﬁtability. To achieve these goals, Airbus Military is actively:

Strengthening its Position as a Major Supplier of Special
Mission Aircraft
As a supplier of special mission aircraft, Airbus Military satisﬁes
customers’ mission-speciﬁc requirements by relying on its
own specialised technologies (aerial refuelling boom system(“ARBS”), fully integrated tactical system (“FITS”), maritime

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patrol and antisubmarine warfare solutions (MPA, ASW, ASuW),
signal intelligence (SIGINT) and airborne early warning andcommand (AEW&C), as well as those of EADS’ wide rangeof platforms and systems. Airbus Military will seek further
consolidation of its position in this market in the future, inparticular through its offering of the A330 MRTT, which enteredinto service in 2011.

Maintaining its Leadership for Military Transport Aircraft
Airbus Military is a global leader in the light and medium
military transport aircraft markets. Through the addition of the
A400M heavy military transport aircraft — which has so far
accumulated more than 2,600 successful ﬂight test hours andwhose certiﬁcation is targeted for 2012 — Airbus Military offersa full range of tactical military transport aircraft capable ofcovering all mission needs.

Increasing Services Revenue by Expanding its Offering ofMission-Critical Services
Airbus Military intends to further develop and deliver “value
for money” solutions for its clients based on a comprehensive
understanding of their needs and through the formation of
long-term partnerships worldwide. Airbus Military offers acompetitive services portfolio ranging from traditional support
to full availability-based and ”mission success” contracting,leveraging its capabilities as a design authority to provide fully
integrated support service to clients throughout the life cycle ofits products.

MarketSpecial Mission AircraftSpecial mission aircraft are derived from existing aircraft
platforms and adapted to particular missions, in general for
military and security customers. Adaptations to the platform
require thorough knowledge of the basic airframe, which
generally only the aircraft manufacturer possesses. The skills
necessary for the overall systems integration into the aircraft areextensive and the number of participants in the world market isvery limited.
Moreover, modern defence and warfare require independent
access to complex forms of information in various operational
theatres, and customers are therefore increasingly demanding
comprehensive systems tailored to their speciﬁc operational
requirements. This development as well as rapidly evolving
defence and security needs is expected to boost demand forspecial mission aircraft in the medium-term. Airbus Military
believes that it is well positioned in this market based on therange of customised solutions that it offers.

Military Transport Aircraft
Governments and national organisations constitute the main
customers in the market for military transport aircraft. This
market consists of three segments: (i) light transport aircraft,with a payload of one to three tonnes, (ii) medium transport
aircraft, with a payload of four to 14 tonnes, and (iii) heavytransport aircraft, with a payload of 13 tonnes or more.
According to an analysis by DMS Forecast International — anindependent aerospace and defence industry consulting ﬁrm

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to amount to approximately US$ 69.6 billion from 2011 through2012 (value of production).
Heavy Military Transport. This market segment has been
driven historically by US policy and budget decisions, andtherefore has been dominated by US manufacturers, inparticular Lockheed Martin’s C-130 Hercules. The A400M
represents Airbus Military’s entry into this market, at a time
when the US and Europe are expected to begin upgrading andreplacing their existing ﬂeets. In the upper part of the segment,
the A400M could compete against the C-17 from Boeing.
Medium Military Transport. Management believes that thismarket will continue to grow at a moderate rate. Airbus Military
aircraft are leaders in this segment, speciﬁcally the CN235 andC295 aircraft, which have a combined average market share(in units) of 48% over the last ten years according to internal
estimates. Both the CN235 and the C295 have been designed
as complements or replacements for the ageing C-130
Hercules, accomplishing most of their missions at a much
lower operating cost. Their competitors are the C-27J Spartan,
manufactured by Alenia Aeronautica, and the An-32,
manufactured by Antonov.
Light Military Transport. This is a mature market that isdiminishing in size as countries develop economically and areable to afford medium military transport aircraft. The C212 hashistorically led this market segment, with an average market
share (in units) of 17% over the last ten years according tointernal estimates. The C212’s main competitors are the M-28,
manufactured by Polskie Zaklady Lotnice Mielec, and the
DHC-6 Series 400, manufactured by Viking, Canada.

Products and Services
Special Mission Aircraft
Multi-Role Tanker Transport — A330 MRTT. The
A330 MRTT, a derivative of the successful Airbus A330/A340
family, is the world’s leading air-to-air refuelling aircraft. Its huge
basic fuel capacity means that no auxiliary tanks are needed togive air-to-air refuelling performance that exceeds its nearest
competitors. Fuel is passed through an innovative ﬂy-by-wirerefuelling boom that delivers a larger fuel ﬂow rate, refuellingenvelope and better control than other systems available on themarket. As the A330 MRTT does not need auxiliary fuel tanks,
the entire cargo bay is available for freight, with the possibility ofincorporating standard LD3 or LD6 containers, military pallets
and/or any other type of load device in use today. Airbus Militaryachieved civil and military certiﬁcation for the A330 MRTT in2010.
To date, Airbus Military has won contracts for the A330 MRTTwith the governments of Australia, Saudi Arabia (including one
repeat order), the United Arab Emirates and the UK, with a total
backlog of 22 aircraft at the end of 2011. This includes a 27-year
contract with the UK Ministry of Defence (“MoD”) in connection
with the latter’s Future Strategic Tanker Aircraft (“FSTA”)
programme through the AirTanker consortium. The FSTA
programme calls for the provision of a ﬂeet of 14 new tanker
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1enter service from the beginning of 2012, replacing the previous
ﬂeet of VC-10 and Tristar refuelling aircraft. The contract also
includes provision for all necessary infrastructure, training,
maintenance, ﬂight management, ﬂeet management and groundservices to enable the Royal Air Force to ﬂy air-to-air refuelling
and transport missions worldwide.
Airbus Military is also working on a technological programme
aimed at developing a new ARBS. The new ARBS is designed
to provide a refuelling performance that is substantially fasterthan that of the competition — a considerable advantage given
the vulnerability of the aircraft during the refuelling procedure.
The ARBS has been tested with over 1,300 dry and wet
contacts on a wide range of aircraft, including F-16 and F/A-18
ﬁghters and E-3 Awacs.
Maritime Patrol Aircraft. Airbus Military provides different
solutions ranging from maritime surveillance to anti-submarine
warfare missions through aircraft based on the C212, CN235,
C295 or P-3 Orion platforms. Airbus Military aircraft, speciﬁcallythe CN235 and C295, have a combined average market share(in units) of 43% over the last ten years according to internal
estimates. Their main competitors are maritime patrol versionsof the Bombardier Dash-8 Q200/Q300 and Alenia ATR 42/72.
Airbus Military also develops FITS, which is the core of themission system installed on these maritime patrol platforms.
FITS is a new generation system that enhances tacticalawareness and facilitates decision-making processes andoperations within a network-centric environment.
In 2011, the US Coast Guard ordered one additional CN235 foruse within the Deepwater programme. In terms of deliveries,
Airbus Military delivered three CN235 and three C295 maritime
patrol aircraft in 2011 (two CN235 for the US Coast Guard, one
CN235 for Mexico, one C295 for Portugal and two C295 ASW
for Chile).
Based on the maritime patrol conﬁguration, the C295 ASW
is the ﬁrst ASW type designed and certiﬁed in Europe andintended to replace ageing P-3 Orion or Bréguet Atlantic
ﬂeets. Airbus Military is also involved in the modernisation andoperational upgrade of P-3 Orion maritime patrol aircraft for the
Spanish and Brazilian Air Forces. The programme includes the
FITS installation together with new mission sensors and avionics
equipment. In 2011, a new upgraded P-3 was delivered to the
Spanish Air Force and two were delivered to the Brazilian Air
Force.

Military Transport Aircraft
CN235 — Medium Military Transport. The ﬁrst version
in the CN235 family, the S-10, entered into service in 1987.
The latest one, the Series 300, is a new-generation, twinturboprop, pressurised aircraft. The CN235-300 is capableof transporting a payload of up to 6,000 kg, accommodating(i) 36 paratroopers, (ii) 18 stretchers plus three medical
attendants, (iii) four of the most widely used types of freightpallets, or (iv) oversized loads such as aircraft engines orhelicopter blades. Paratrooper operations can be performed
through the two lateral doors in the rear part of the aircraft orover the rear ramp. Variants of the CN235-300 are used forother missions such as maritime patrol or pollution control,

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among others. Considering all variants, over 260 CN235 aircraft
have been delivered since the beginning of the programme.
C295 — Medium Military Transport. Certiﬁed in 1999, theC295 has a basic conﬁguration similar to the CN235, with astretched cabin to airlift a 50% heavier payload at greater speed
over longer distances. The C295 is equipped with integrated
avionics incorporating digital cockpit displays and a ﬂight
management system, enabling tactical navigation, planning andthe integration of signals from several sensors. The C295 has
accumulated 110,000 ﬂight hours in all kind of environments:from the polar arctic areas to deserts. Over 85 C295 aircraft
have been delivered to 14 operators from 13 countries.
In 2011, Airbus Military received a total order for three
C295 aircraft from Mexico and Ghana (which became a newcustomer) and delivered a total of seven C295 aircraft to
Mexico, Finland, Egypt and Ghana.
C212 — Light Military Transport. The C212 was designed
as a simple and reliable unpressurised aircraft able to operatefrom makeshift airstrips in order to perform both civilian andmilitary tasks. The ﬁrst version, the S-100, entered into service
in 1974. The latest version, the S-400, incorporates several
improvements such as new avionics and engines for enhanced
performance in hot climates and high altitudes, as well as
improved short take-off and landing performance. In addition,
the C212’s rear cargo door provides multi-mission capability
with a conﬁguration that can be changed quickly and easily,
thereby reducing turnaround times. Since the beginning of the
programme, a total of 475 C212 aircraft have been delivered.
In 2011, Airbus Military delivered a total of three C212 aircraft toVietnam and Thailand.

New Product Development
A400M. The A400M is an all-new military airlifter designed
for tactical, strategic and logistic applications, intended torespond to the needs of the world’s armed forces for military,
humanitarian and peacekeeping missions. Airbus Military’s
objective is to develop a leadership position in the market forheavy military transport aircraft, which together with its medium
and light military transport aircraft will allow it to offer a fullrange of tactical military transport aircraft to customers. The
current order book comprises 174 aircraft, with 170 allocatedto the seven launch customer nations and four to one export
customer, Malaysia. In addition, there are 10 options (seven
for Germany and three for the UK). Airbus Military will seek
additional export opportunities for the A400M while providing
in-service support for customers following entry into service.
The ﬂight test campaign is progressing and had logged morethan 2,600 ﬂight test hours and around 900 ﬂights by theend of 2011. The ﬁfth and ﬁnal test aircraft started ﬂights in
December 2011. The main programme target in 2012 is toobtain initial operating clearance (IOC) for the aircraft, with theﬁrst customer delivery (to the French Air Force) targeted for theend of 2012 or early 2013. Seven additional aircraft are currently
in various stages of production with a full production rate of
2.5 aircraft per month targeted for 2015.

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1In April 2011, Airbus Military announced that an amendment to
the A400M contract had been signed by OCCAR and the seven
A400M launch customer nations, following negotiations on
various aspects of a new programme approach for the A400M.
For a discussion of the related ﬁnancial consequences, see“Management’s Discussion and Analysis of Financial Condition
and Results of Operations — 2.1.1.3 Signiﬁcant Programme
Developments in 2009, 2010 and 2011 — A400M programme”.

Customer Services
More than 800 delivered aircraft are supported by Airbus
Military’s Customer Services organisation, which offers
personalised assistance to meet the needs of each operator.
Airbus Military applies the integrated logistic support (“ILS”)
concept throughout the life cycle of its products, from the ﬁrst
design phase right through to the end of their useful lifetimes.
Airbus Military’s main objective is to ensure that clientsobtain the best operational performance and beneﬁt from an
integrated support service in accordance with their needs, thus
guaranteeing the success of their missions.
Airbus Military support centres are strategically locatedthroughout the world to provide maintenance on equipment.
Overhaul and repair services can also be obtained at eachlocation. In November 2011, EADS PZL Warszawa-Okęcie,the Polish branch of Airbus Military, opened a new MRO
service centre dedicated to the repair and servicing of Airbus
Military C295 aircraft. This is Airbus Military’s second service
centre in Europe, adding to the capabilities of its service centre
in Seville.

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As new products are introduced, Airbus Military service
centre capabilities are continually updated to support them.
For example, Airbus Military is currently working on
development of ILS tasks, products and associated services
to support the A400M’s entry into service. Negotiations on
in-service support for France (the ﬁrst A400M customer) areon-going.
In 2011, Airbus Military sought to enhance its Customer
Services organisation by reinforcing the role of the customer
programme managers, in order to increase customer
satisfaction and develop additional business opportunities
related to mission-critical services throughout the product life
cycle.
Finally, Airbus Military has the capability to design, develop,
produce and give assistance with training at different levelsof complexity. An Airbus Military training centre is located in
Seville, which has space for six full-ﬂight simulators and a rangeof other computer-based training devices.

Production
A ﬁnal assembly line for light and medium aircraft is located at
the San Pablo factory in Seville (southern Spain). The facilities– which are shared with the A400M – have a surface area of
600,000 m2.

1.1.3 Eurocopter
Introduction and Overview

Strategy

Eurocopter is a global leader in the civil and military helicopter
market, offering one of the most complete and modern rangesof helicopters and related services. This product range currently
includes light single-engine, light twin-engine, medium andmedium-heavy helicopters which are adaptable to all kinds of
mission types based on customer needs. In 2011, Eurocopter
recorded total revenues of € 5.4 billion, representing 11.0% of
EADS’ revenues.

Eurocopter aims at further strengthening its position andincreasing its services revenues in order to achieve sustained
proﬁtable growth. To achieve these goals, Eurocopter is actively:

Eurocopter delivered 503 helicopters in 2011 (527 in 2010),
including the 1,000th Dauphin and the 1,000th EC135 helicopter.
Eurocopter received 472 gross orders in 2011 (compared to
395 gross orders in 2010). After accounting for cancellations,net order intake for 2011 was 457 helicopters (compared to
346 helicopters in 2010). Civil contracts accounted for 68% of
this order volume, with military sales representing the remaining
32%. As of 31 December 2011, Eurocopter’s backlog ofhelicopter orders was 1076 aircraft (compared to 1,122 aircraftin 2010).

36 I EADS REGISTRATION DOCUMENT 2011

Implementing an Ambitious Productand Services Policy
With the aim of maintaining market leadership and technologicalsuperiority, Eurocopter will continue to strongly invest in the
renewal of its comprehensive products and services lines of civil
and military helicopters. Accordingly, Eurocopter is currently
focused on launching a number of platform upgrades and othernew developments, in particular in the medium and mediumheavy segments of the market (e.g., EC175 and X4), so as toincorporate the latest innovations. Through a combination ofcore technological solutions with high-value customisation
capabilities, Eurocopter seeks to offer a cost-effective solution
to both civil and military customers with multi-mission needs.
The latest products launched on the market (like the EC145 T2
or EC130 T2) have received a very positive customer response.

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In addition, Eurocopter will seek a signiﬁcant expansion inits service offering in order to enhance aircraft availability as
well as mission performance and cost effectiveness for its
customers. Support and service efﬁciency is therefore a major
focus in Eurocopter’s latest products developments, aimed
equally at generating future revenues and increasing customer
satisfaction. Eurocopter may also pursue external growth
opportunities to increase its service offering in the future, as it
did through the acquisition of Vector Aerospace in 2011.

Globalising to Capture Growth Worldwide
Eurocopter’s business model is heavily focused on exports, andgrowth of its global footprint will remain a priority for the future.
Building on its already strong implementation in countries likethe US, Australia and Brazil and its presence in 30 nations,
Eurocopter will seek to further develop its industrial footprintin potential growth markets such as Russia, China and India.
Through such international expansion, Eurocopter intends toincrease platform sales and capture service opportunities in theafter-sales market, in line with customer proximity efforts.

Building a Leaner, More Streamlined Company
Following implementation of the “SHAPE” transformation
programme in 2010, Eurocopter is pursuing further
improvement initiatives to build an ever leaner and efﬁcientcompany and thereby bolster its competitiveness. In this regard,
Eurocopter has launched the “LEAN” initiative across the wholevalue chain in order to increase efﬁciency. This is intended toresult in shorter product development time, faster production
cycles and enhanced customer service.

MarketMarket Drivers
The value of turbine helicopters delivered worldwide grew froman estimated € 17.4 billion in 2010 to an estimated € 18 billion
in 2011. According to market forecasts published by The
Teal Group, Honeywell and Rolls Royce, between 9,000 to
11,000 civil helicopters and 6,000 to 6,800 military helicopters
are expected to be built globally between 2012 and 2020.
This forecast, particularly with respect to the military sector,
relies to a large extent on large US development programmes.
Helicopters sold in the civil and parapublic sector, where
Eurocopter is a leader in each market segment, provide
transport for corporate executives, offshore oil operations,diverse commercial applications and state agencies, including
coast guard, police, medical and ﬁre-ﬁghting services. Market
data indicates that in 2011, worldwide deliveries of civil turbine
helicopters stood at approximately 786 units.
Demand for military helicopters, which are usually larger andhave more sophisticated systems than civil helicopters, is mainly
driven by budgetary and strategic considerations, and the needto replace ageing ﬂeets. Eurocopter believes that the advanced
age of current ﬂeets, the emergence of a new generationof helicopters equipped with integrated systems and theon-going introduction of combat helicopters into many national

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armed forces will contribute to increased military helicopter
procurement over the next few years. Recent large-scale
military programmes, such as those conducted by the US,
Russia, China, India, South Korea, Saudi Arabia, Brazil andmost western European countries have conﬁrmed this trend.
Nevertheless, demand from the military sector has historically
been subject to large year-to-year variations due to evolving
strategic considerations, and short-term growth potential may
be limited due to increasing budgetary constraints on public
spending in some regions like Europe, while other regions like
Asia or Latin America are expected to continue growing. Market
data indicates that in 2011, worldwide deliveries of militaryhelicopters stood at 661 units.

Competition
Eurocopter’s main competitors in the civil and parapublic
sector are Agusta-Westland, Sikorsky and Bell Helicopter. The
civil sector has grown more competitive in recent years, with
Sikorsky and Agusta-Westland having increased their market
share in the heavy and medium helicopter classes, while Bellhas increased its market share in the light helicopter classes.
The military sector is highly competitive and is characterisedby competitive restrictions on foreign manufacturers’ access tothe domestic defence bidding process, sometimes to the virtual
exclusion of imports. Nevertheless, with the introduction of the
Tiger, NH90 and EC725 and with a more aggressive approach
to international industrial cooperation, Eurocopter’s share of the
global market for military helicopters has increased. In 2011,
Eurocopter ranked third in the military sector by deliveries in amarket still dominated by US manufacturers and, more recently,
Russian manufacturers. Eurocopter’s main competitors in the
military sector are Agusta-Westland in Europe, and Sikorsky,
Boeing and Bell Helicopter (a division of Textron Inc.) in the US.
Russian manufacturers have been aggressive particularly in the
Asian and Latin American markets. Military sales accounted for
47% of Eurocopter’s revenues in 2011.

Customers
Almost 3,000 operators currently operate Eurocopter
helicopters in 149 countries, forming a broad base forEurocopter’s customer support activities. 85% of Eurocopter’scustomers have ﬂeets of between one and four helicopters.
Eurocopter’s principal military clients are European MoDs, aswell as MoDs in Asia, the US and Latin America. In the civil andparapublic sector, Eurocopter has a leading market share inEurope, the US and Canada.
The versatility and reliability of Eurocopter products have madethem the preferred choice of the most prominent customers.
The world’s largest offshore operators (such as Bristow,
CHC, Era and PHI) use Eurocopter helicopters for passenger
transport and offshore oil industry support. In the emergency
medical services market segment, Eurocopter helicopters
dominate the ﬂeets of large operators such as Air Methods in
the US and ADAC in Germany. Agencies with high serviceability
requirements, including police and armed forces, also rely on
Eurocopter products.

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Eurocopter’s marketing strategy is strongly leveraging on thescale of its global network. Eurocopter’s network currently
encompasses 30 foreign subsidiaries, complemented by a rich
network of authorised distributors and service centres aimed ata large number of existing and potential clients. Eurocopter has
developed expertise in production licensing, joint production
and subcontracting agreements, and has been developing links
with industrial partners and suppliers in more than 35 countries.

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Products and Services
Eurocopter offers a complete range of helicopters that covers
nearly the entire civil and military market spectrum, which it
updates continuously with leading-edge technologies. This
product range includes light single-engine, light twin-engine,
medium and medium-heavy helicopters, and is based on aseries of new-generation platforms designed to be adaptable toboth military and civil applications. In addition, products sharemultiple technical features as part of a family concept approach.

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

Light Single Engine
EC120 “Colibri”

Corporate/Private, Civil & Military Training

Single Engine (“Ecureuil” family)
AS350 “Ecureuil”/AS550 “Fennec”
EC130

Parapublic (1), Civil & Military Utility (2), Corporate/Private
Emergency Medical, Tourism, Oil & Gas, Corporate/Private

Light Twin Engine
AS355NP/AS555
EC135/EC635
EC145/LUH (UH-72)/EC645

Parapublic (1), Utility, Corporate/Private
Emergency Medical, Parapublic (1), Oil & Gas, Corporate/Private
Civil & Military Utility (2), Emergency Medical, Parapublic (1), Shuttle

Medium (“Dauphin” family)
AS365 “Dauphin”/AS565 “Panther”

Parapublic (1) (in particular Coast Guard & SAR), Oil & Gas

EC155

Corporate/Private, VIP, Oil & Gas, Parapublic (1), Shuttle

EC175

SAR, Emergency Medical, Oil & Gas

Medium-Heavy
AS332 “Super Puma”/AS532 “Cougar”
EC225/EC725
NH90 (TTH/NFH)

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

AttackTiger

Combat, Armed reconnaissance/Escort(1) Parapublic includes homeland security, law enforcement, fire fighting, border patrol, coast guard and public agency emergency medical services.
(2) Civil Utility includes different kinds of commercial activities such as aerial works, electrical new gathering (ENG), passenger and cargo transport.

Civil Range
Eurocopter’s civil range includes light single-engine, lighttwin-engine, medium and medium-heavy helicopters which
are adaptable to all kinds of mission types based on customer
needs. In order to maintain and strengthen its competitiveedge in the civil sector, Eurocopter is pursuing a fast-paced
product range renewal. This will entail both upgrades of existing
platforms and new development for the next generation ofhelicopters.
The newest products targeted for entry into service in the
short-term are the twin-engine EC145T2/P2 and the mediumclass EC175. The EC145T2/P2 helicopter has been developed
based on the existing EC145, and was unveiled in early 2011at the Heli-Expo air show in Orlando, Florida. The EC145T2/P2
incorporates Eurocopter’s latest innovations in terms of power,

38 I EADS REGISTRATION DOCUMENT 2011avionics, ﬂight safety, noise reduction and mission equipment
and also features a brand-new tail-boom Fenestron assembly.
In addition, Eurocopter and Chinese AVIC II Corporation
have launched the joint development and production (on a50/50 basis) of the EC175, a civil helicopter in the 6-tonne
category, which will broaden both partners’ product ranges.
The development phase began in 2006 and is targeted to end
with aircraft certiﬁcation in 2012, with entry into service planned
thereafter.
Towards the second half of the decade, Eurocopter is working
on the development of the X4 helicopter, the next-generation
helicopter and successor of the current Dauphin family. Packed
with innovative features and technology, the X4 will offer
signiﬁcantly improved performances, less fuel consumption andnoise emissions, and will provide pilots with a new way of ﬂying
a helicopter.

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Military Range
Eurocopter’s military range comprises platforms derived fromits commercial range (such as the EC725 derived from theEC225) as well as purely military platforms for governmental
development programmes (the NH90 and the Tiger).
NH90. Designed for modern multi-mission capabilities andcost effectiveness throughout its lifecycle, the NH90 has
been developed as a multi-role helicopter for both tacticaltransport (TTH) and naval (NFH) applications. The programme,
mainly ﬁnanced by the governments of France, Germany,
Italy and the Netherlands, has been jointly developed by
Eurocopter, Agusta-Westland of Italy and Fokker Services of
the Netherlands as joint partners in Nato Helicopter Industries(“NHI”) in direct proportion to their countries’ expressed
procurement commitments. Eurocopter’s share of NHI is 62.5%.
There were 32 NH90 deliveries in 2011, for a cumulative total of
100 deliveries as of the end of 2011.
Tiger. The Tiger combat attack helicopter programme includes
four variants based on the same airframe: the HAP (turreted
gun, rockets and air-to-air missile), 40 of which have beenordered by France and 6 by Spain; the UHT (antitank missile,
air-to-air missile, axial gun and rockets), 80 of which have beenordered by Germany; the ARH (antitank missile, turreted gun
and rockets), 22 of which have been ordered by Australia; andthe HAD (antitank missile, air-to-air missile, turreted gun, rockets
and upgraded avionics and engines), 24 and 40 of which havebeen ordered by Spain and France, respectively. The Tiger has
been deployed in Afghanistan by the French Armed Forces
since 2009 with three helicopters permanently on site, and in
Libya for a few months in 2011. There were 16 Tiger deliveriesin 2011, for a cumulative total of 86 deliveries as of the end of
2011.

Customer Services
With 2,959 operators in 149 countries, Eurocopter has a large
ﬂeet of more than 11,470 in-service helicopters to support. As
a result, customer service activities to support this large ﬂeet
generated 38% of Eurocopter’s revenues for 2011. Eurocopter’scustomer service activities consist primarily of maintenance,
repairs, spare parts supply, training and technical support.

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In order to provide efﬁcient worldwide service, Eurocopter has
established an international network of subsidiaries, authorised
distributors and service centres. Further, in order to meetglobalising customer demand, Eurocopter has been extending
its range of customer services. Eurocopter plans to pursue thisexpansion in order to offer its customers advanced services thatare tailor-made to their operations. Eurocopter’s service offering
is not only limited to its own helicopter ﬂeet but also comprises
other original equipment manufacturer (OEM) platforms as well
as ﬁxed-wing mission aircraft.
In 2011, Eurocopter enhanced its worldwide presence
and expanded its services activities with the acquisition of
Vector Aerospace Corporation, a leading maintenance repair
and overhaul services provider for ﬁxed and rotary wings
aircraft. This acquisition, the largest in Eurocopter’s history, isintended to help the company bolster its activities in both civiland governmental markets as well as increase the Company’spresence in North America and the UK.

Production
Eurocopter’s industrial activities are conducted in four primarylocations, two in France, one in Germany and one in Spain.
The French sites are Marignane, in southern France, and
La Courneuve, near Paris. The German site is located in
Donauwörth, and the Spanish site is located in Albacete.
In the US, American Eurocopter has an industrial site in
Columbus, Mississippi, which is dedicated to the assemblyand delivery of light utility helicopters for the US government.
In Australia, Australian Aerospace assembles NH90 and
Tiger for the country’s armed forces. Work is also on-goingon construction of a new rotary-wing centre of excellence in
Itajuba, Brazil, where Helibras (Eurocopter’s Brazilian subsidiary)
will produce, assemble and maintain EC725 helicopters
acquired by the Brazilian armed forces as well as Ecureuils.
Eurocopter will continue to pursue international expansion of its
global supply chain with an emphasis on US dollar-based andlow-cost sourcing in particular, while also seeking to rationalise
its supply network and streamline its internal industrialorganisation in parallel.

1.1.4 Astrium
Introduction and Overview
Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin
and the leading European supplier of satellites, orbital
infrastructures, launchers and associated services. In 2011,
Astrium recorded total revenues of € 5.0 billion, representing
10.1% of EADS’ revenues.
Astrium has three main Business Units: Astrium Satellites,
Astrium Space Transportation and Astrium Services. These
Business Units include the provision of launch services throughAstrium’s shareholdings in Arianespace (Ariane 5 launcher),Starsem (Soyuz launcher) and Eurockot (Rockot launcher),as well as services related to telecommunication and Earthobservation satellites through wholly or majority owned
subsidiaries such as Paradigm Secure Communications,
Infoterra and Spot Image.

StrategyWith its established presence in ﬁve European countries thathave active space programmes (France, Germany, UK, Spainand the Netherlands), Astrium is the only European company tooffer comprehensive expertise in all areas of the space industry

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1(satellites, launchers, orbital infrastructure, equipment andservices). Astrium’s strategy is to strengthen its position in themarket by offering its customers a wide range of solutions built
on these key strategic assets.
With the launcher and satellite markets still ﬂat, Astrium
continues to focus on strengthening its services activity inparticular, which is expected to account for the largest part ofgrowth in the coming years. The creation of a new internationalsales and marketing organisation in 2011, together with theacquisition of Vizada (as discussed below), reﬂects Astrium’s
strategy of developing industrial footprints in key countries andmarkets in order to achieve the expected contribution to theGroup’s long-term objectives. To achieve its goals, Astrium is
actively seeking to:Generate profitable growth in a flat market
Institutional and military spending on space activities is relatively
ﬂat in Europe due to existing budget constraints. Competitionin commercial markets for launchers and telecommunication
satellites is also intense, in particular given the weakness of the
US dollar against the euro in recent years. Within this difﬁcult
market context, Astrium is pursuing the following strategy:
O with respect to the Ariane launcher and M51 missile systems,
Astrium Space Transportation has sought to rationalise
and streamline its activities by assuming the role of prime
contractor (as opposed to a main supplier and industrial
architect only). This has strongly contributed to increasing thereliability and cost effectiveness of these products. In addition,
Astrium is currently the second largest shareholder ofArianespace with a 32.5% stake after the French space
agency (“CNES”). Astrium Space Transportation will seek tostrengthen this leadership to better serve its customers;
O with respect to satellites and services, Astrium has sought
in recent years to move from being solely a systems supplier
to a leading satellite service provider in the areas of securecommunication and geo-information. The acquisition ofVizada, a leading telecommunication services company
providing both mobile and fixed satellite communication
services to business-to-business (B2B) customers,
represents an important step forward in 2011. Other
examples include Astrium’s agreement to acquire 66.78%of the Italian company Space Engineering, a specialist indigital telecommunications, radio frequency (RF) and antenna
equipment engineering for both space and ground based
applications, as well as an increase in Astrium’s ownershipof the US geo-information company I-Cubed (from 25% to78%). In the future, Astrium will seek to further strengthen its
position in the field of geo-information services.

Be the benchmark in terms of customer service
and attractiveness to employees
Launched in 2010 to counter the increasingly challenging
market environment and enhance proﬁtability, thetransformation programme AGILE (Ambitious, Globally
growing, Innovative, Lean and Entrepreneurial) strives toimprove Astrium’s agility and competitiveness, while freeing up
additional resources to invest in innovation. At the same time,
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AGILE emphasises customer orientation as well as employee
empowerment. In 2011, measures implemented under AGILE
enabled Astrium to win business in new export markets, suchas the sale of satellites in the US (DirectTV15) and Malaysia(Measat 3B).

Astrium Satellites
Astrium Satellites is a world leader in the design andmanufacturing of satellite systems, payloads, groundinfrastructure and space equipment for a wide range of civil andmilitary applications. Prime contractor for 100 communication
satellites, Astrium Satellites is a reference partner for manyof the world’s most prestigious operators. Astrium Satellites’
business covers the four categories of satellite systems —telecommunication, observation, scientiﬁc and navigation
satellites.

Market
The commercial telecommunication satellite market isextremely competitive, with customer decisions based on
price, technical expertise and track record. In 2011, Astrium
Satellites’ worldwide market share (in units) for new ordersof geostationary satellites amounted to approximately 20%
according to internal estimates. Its main competitors are Loral,
Boeing, Orbital and Lockheed Martin in the US, Thales Alenia
Space (TAS) in France and Italy, and Information Satellite
Systems Reshetnev in Russia. The geostationary commercial
telecommunication market is expected to remain stable at
a level of orders of approximately 20-22 orders per year on
average over the next 5 years, with increased competition.
Astrium Satellites will seek to reinforce its position in this market.
In the market for observation, scientiﬁc and navigation satellites,
competition in Europe is organised either on a national or
multinational level, such as through the European Space
Agency (“ESA”). There is also sizeable export demand for Earthobservation systems, for which EADS is the leading European
provider. Furthermore, civil state agencies, including ESA, havedisplayed increased needs for Earth observation satellites,
for example in the framework of European environmental
programmes. Astrium expects this market to continue growing
over the medium-term.
Finally, for military customers, demand for telecommunicationand observation satellites has increased in recent years.
The Skynet 5/Paradigm contract in the UK, the Satcom BW
contract in Germany, the Yahsat contract in the United ArabEmirates and the 2010 contract for two optical reconnaissancesatellites in France demonstrate the growth trend in this market.

Products and Services
Astrium Satellites offers turnkey satellite systems to its
customers, including through an array of wholly owned
subsidiaries such as (i) EADS CASA Espacio (Spain), which
supplies platforms, space-borne antennas, deployment
mechanisms and harness subsystems for telecommunication
satellites, (ii) CRISA (Spain), which designs and manufactureselectronic equipment and software for space applications,(iii) Tesat (Germany), which is in charge of telecommunicationelectronic equipment and subsystems, (iv) Dutch SpaceINFORMATION ON EADS’ ACTIVITIESPRESENTATION OF THE EADS GROUP

1(Netherlands), which provides solar arrays and other specialised
items, (v) SSTL (UK), which provides small satellites andpayloads, and (vi) Jena-Optronik, which provides space sensors
and optical systems.
Telecommunication Satellites. Astrium Satellites produces
telecommunication satellites which have multiple applications,such as long-distance and mobile telephone links, television andradio broadcasting, data transmission, multimedia and Internet
trunking. They may be used for civil or military applications.
Astrium’s geostationary telecommunication satellites are
based on the EUROSTAR family platforms (67 ordered to date),the latest version of which is EUROSTAR 3000.
Astrium Satellites won orders for four commercial
telecommunication satellites in 2011 (Measat 3B for Malaysian
operator MEASAT, DirectTV 15 for Direct TV, Eutelsat 3B
and 9B for Eutelsat). Five telecommunication satellites werelaunched in 2011: Yahsat 1A for Yahsat (April 2011), Astra 1N for
SES Astra (August 2011), AM4 for RSCC (August 2011), Arabsat
5C for Arabsat (September 2011) and Atlantic Bird7 for Eutelsat(September 2011).
Observation and Scientiﬁc Satellites. Astrium Satellites is theleading European supplier of Earth observation satellite systems
for both civil and military applications. In this ﬁeld, customers
derive signiﬁcant beneﬁts from the common elements ofAstrium Satellites’ civil and military programmes. Observation
satellites allow the collection of information for various ﬁelds,such as cartography, weather forecasting, climate monitoring,
agricultural and forestry management, mineral, energy andwater resource management and military reconnaissance andsurveillance applications. Astrium Satellites also produces
scientiﬁc satellites, which are tailor-made products adapted
to the speciﬁc requirements of the mission assigned to them.
They have applications such as astronomical observation ofradiation sources within the universe, planetary exploration andEarth sciences.
Astrium Satellites designs and manufactures a wide rangeof highly versatile platforms, optical and radar instruments
and equipment for the complete scope of remote-sensing
applications, operations and services. Astrium Satellites is theprime contractor for complex missions such as (i) Pléiades,
two small and highly agile Earth observation satellites for civil
and military applications, (ii) Swarm, a climatology satellite
monitoring the evolution of the Earth’s magnetic ﬁelds,(iii) Gaia, a global space astrometry mission, (iv) Bepi Colombo,
an observation mission to Mercury, (v) EarthCARE, a joint
European-Japanese cloud and aerosol mission, (vi) Seosatand Seosar, a radar Earth observation system for the Spanish
government, and (vii) Spot 6 and Spot 7 for Spot Image, asubsidiary of Astrium Services.
In 2011, Astrium was selected by ESA as prime contractor
for the development and construction of Sentinel-4 dual
spectrometers and Sentinel 5 Precursor satellite, bothpart of the Global Monitoring for Environment and Security(“GMES”) programme. Astrium also won one order for an Earthobservation satellite from the Vietnam Academy of Science &Technology.

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Six Earth observation satellites were launched in 2011:
Pléiades 1A for the CNES (December 2011), the four
ELISA micro-satellites for the joint DGA/CNES customer(December 2011), and SSOT for the Chilean Armed Forces(December 2011).
Navigation Satellites. Astrium Satellites produces navigation
satellite systems, which deliver signals that enable users todetermine their geographic position with high accuracy, andare increasingly signiﬁcant in many sectors of commercial
activity, such as airlines, transport operators on land, sea andair, emergency services, agriculture and ﬁsheries, tourism andtelecommunication networks. Following the decision reachedby the European Union at the end of 2007 to move ahead
with the development of a European global satellite navigation
system,“Galileo”, ESA has been placed in charge of direct
procurement of the various necessary components (spacesegment, ground segment, system support, launchers, etc.).
Astrium is responsible for the Galileo in-orbit validation phase(“IOV”) to test the new satellite navigation system under real
mission conditions. The IOV phase covers the constructionof the ﬁrst four satellites of the constellation and part of theground infrastructure for Galileo, followed by the testing of thispartial system. In 2011, the ﬁrst two Galileo IOV satellites weresuccessfully launched and completed their launch and early
operations sequence. Astrium will also play an active role in thefull operational capability phase (“FOC”) of Galileo, in particularthrough its subsidiary SSTL which will provide the payloads forthe ﬁrst 14 FOC satellites. In 2011, ESA awarded Astrium theGalileo Full Operational Capability Ground Control Segment,
which covers the provision of ground control segment facilities
for the operation of the Galileo constellation.

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

Orbital Infrastructure
The orbital infrastructure segment comprises manned andunmanned space systems. The ISS, together with related
vehicle and equipment development programmes and services,
constitutes the predominant ﬁeld of activity in this segment.
Astrium Space Transportation is the prime contractor under
an ESA contract relating to two key elements of the ISS:
the Columbus Orbital Facility laboratory (“COF”) and the
ATV cargo carrier.

MarketDemand for orbital infrastructure systems originates solely
from publicly funded space agencies, in particular from ESA,
NASA, Roscosmos (Russia) and NASDA (Japan). Such systems
are usually built in cooperation with international partners.
In addition to the COF and ATV projects, ESA is responsible for
additional ISS components for the station’s construction and

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operational phases. National space agencies, such as DLR and
CNES, are also involved in the development of experimental
facilities to be used on the ISS.

Products and Services
Astrium Space Transportation has been the prime contractor
for the development and integration of the COF. The COF is apressurised module with an independent life-support system.
It provides a full-scale research environment under microgravity
conditions (material science, medicine, human physiology,
biology, Earth observation, ﬂuid physics and astronomy)
and serves as a test-bed for new technologies. In 2011, ESA
awarded Astrium Space Transportation a contract to manage
the continued operation of the European components of the
ISS as the lead partner in an industrial consortium. The contract
represents the ﬁrst phase of a long-term service agreement for
the entire planned service life of the ISS until 2020.
Astrium Space Transportation is also the prime contractor forthe development and construction of the ATV cargo carrier,designed to carry fuel and supplies to the ISS and to provide
re-boost capability and a waste disposal solution. Following theﬁrst two successful launches, the third ATV, “Edoardo Amaldi”,
was shipped to Kourou in August 2011 for ﬁnal assembly.
Following loading, fuelling and installation on an Ariane 5
launcher, it was successfully launched in March 2012.

Launchers & Launch Services
Space systems (including satellites, orbital infrastructureelements and interplanetary probes) depend on rocket
propelled multi-stage launchers, which are consumed during
the launch process, to place them into orbit. Astrium SpaceTransportation is active in two distinct businesses: (i) designingand manufacturing launchers for both civil and military
purposes, and (ii) providing launch services through its interests
in Arianespace, Starsem and Eurockot.
Astrium Space Transportation is the sole prime contractor
for the Ariane 5 system, with responsibility for the delivery to
Arianespace of a complete and fully tested vehicle. Astrium
Space Transportation also supplies all Ariane 5 stages,
the equipment bay, the ﬂight software as well as numerous
sub-assemblies. Additionally, Astrium Space Transportation is
the prime contractor for ballistic missile systems to the French
State. It is responsible for the development, manufacturingand maintenance of submarine-launched missiles and related
operating systems.

Market
The market for commercial launch services continues to
evolve. Competitive pressure is increasing in light of othercompetitors entering or coming back into the market.
The Arianespace accessible market for commercial launchservices for geostationary satellites is expected to remain stable
at 20 payloads per year. However, due to various factors (suchas technology advances and consolidation of customers), thisﬁgure remains volatile. This market does not include institutional
launch services for the US, Russian or Chinese military andgovernmental agencies.

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In the area of national defence, Astrium Space Transportation
has been the exclusive supplier of ballistic missiles to the
French State since the early 1960s. In addition to conducting
production and state-ﬁnanced development work, Astrium
Space Transportation performs substantial maintenance workon the ballistic missile arsenal to ensure system readinessover the life span of the equipment, which may stretch over
several decades. Astrium Space Transportation also provides
on-site support to the French military. Finally, Astrium SpaceTransportation is working in partnership with others on a NATO
contract relating to theatre missile defence architecture.

Products and Services
Launch Services. Astrium Space Transportation is active in theﬁeld of launch services through shareholdings in Arianespace(for heavy-lift launchers), Starsem (for medium-lift launchers)
and Eurockot (for small-lift launchers):
O Arianespace. Astrium is Arianespace’s second largest
shareholder (after CNES) with a 32.5% stake (direct andindirect), and its largest industrial shareholder. Arianespaceis the world’s largest commercial launch service provider interms of total order book. Arianespace markets and sells the
Ariane launcher worldwide and carries out launches from the
Guiana Space Centre in Kourou, French Guiana.
In 2011, Arianespace signed a total of 10 Ariane 5 contracts
for geostationary satellites, representing more than 48% of
the available market. Arianespace conducted five Ariane
launches, which placed eight telecommunication satellites
and one ATV into orbit. Since the first Ariane 5 launch in
1996, 60 Ariane 5 rockets have been launched. In 2011,
Arianespace also performed two history-making inaugural
missions of Soyuz from Kourou, deploying eight institutional
satellites into their respective orbits.
O Starsem. Astrium Space Transportation directly owns 35% ofStarsem, a French corporation, along with Arianespace (15%),
the Russian space agency (25%) and the Russian stateowned Samara Space Centre (25%). Through Arianespace,
Starsem markets launch services by Soyuz launchers for
medium-weight spacecraft into low or sun-synchronous
orbits as well as for interplanetary missions. In 2011, Starsem
conducted two Soyuz launches from Baikonur cosmodrome,
which placed 12 commercial satellites into orbit.
O Eurockot. Astrium Space Transportation (51%) andKhrunichev (49%) jointly control Eurockot Launch Services,which provides launch services for small, low-Earth orbit
satellites with Rockot launchers derived from SS-19 ballistic
missiles.
Commercial Launchers. Astrium Space Transportation
manufactures launchers and performs research anddevelopment for the Ariane programmes. Member states,
through ESA, fund the development cost for Ariane launchers
and associated technology.
Astrium Space Transportation has been the sole prime
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commercial success of Ariane 5, Astrium Space Transportation
signed a contract with Arianespace in 2009 for the
production of 35 Ariane 5 launchers, in addition to the batchof 30 Ariane 5 launchers ordered in 2004. In 2010, Astrium
Space Transportation contracted the ﬁrst part of the Phase
1 development for the Ariane 5 Midlife Evolution, which will
increase launcher capacity with an in-service date scheduled
for 2017. In 2011, Astrium Space Transportation received
conﬁrmation from ESA following a preliminary design review
that the Ariane 5 Midlife Evolution launcher project had been
approved.
Ballistic Missiles. Astrium Space Transportation is the only
company in Europe which designs, manufactures, tests andmaintains ballistic missiles. Following its contracts with the
French State for the submarine-launched ballistic missiles familyof M1, M2, M20, M4 and M45, Astrium Space Transportation
is now under contract to develop and produce the M51 withincreased technical and operational capabilities. With thesuccessful 4th ﬂight test and acceptance launch in 2010, theM51.1 is set to soon enter service on France’s nuclear-poweredballistic missile submarines. In 2010, the French Defence
Procurement Agency and Astrium Space Transportation signed
a contract covering the development and production of thesecond version of the M51 strategic missile (M51.2), which helps
to secure Astrium Space Transportation’s capabilities in thisﬁeld. In addition, Astrium Space Transportation manages theoperational maintenance of the M51 missile system on behalfof the French armed forces. At the end of 2011, Astrium SpaceTransportation received a ﬁrst design study contract in order toprepare the intended M51.3 new upper stage development.

Astrium Services
Astrium Services offers innovative, highly competitive end-toend tailored solutions in the ﬁelds of secure communication andgeo-information. As the European “one-stop-shop” provider
for military satellite communication services, Astrium Services
delivers secure military satellite services to a number ofcountries.
In 2011, Astrium Services acquired Vizada, a leading
independent provider of global satellite communications
services. Vizada has more than 700 employees serving 200,000
end-customers across sectors such as maritime, aero, land,
media, non-governmental organisations and government/
defence. Vizada offers mobile and ﬁxed connectivity services
from multiple satellite network operators, both directly
and through a network of 400 service provider partners.
The integration of Vizada is intended to enhance Astrium
Services’ range of solutions, strengthen its presence globallyand enhance its satellite telecommunication services.
Astrium also ﬁnalised the acquisition of a majority shareholdingof 75.1% in ND SatCom, the satellite equipment provider andground systems integrator based in Friedrichshafen, Germany.

Products and Services
Military Communication. In 2003, the UK MoD selected
Paradigm to deliver a global military satellite communication
service for its next-generation Skynet 5 programme.

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This contract, pursuant to which Paradigm owns and operates
the UK military satellite communication infrastructure, allows the
UK MoD to place orders and to pay for services as required.
Offering a catalogue of services, Paradigm delivers tailored endto-end in-theatre and back-to-base communication solutions
for voice, data and video services, ranging from a single voicechannel to a complete turnkey system incorporating terminals
and network management. Paradigm also provides welfare
services, ensuring that deployed troops can call home andcan use the Internet. The ﬁrst three Skynet 5 satellites werelaunched in 2007 and 2008, enabling the UK MoD to pronounce
full operational service in 2009. In 2010, the contract was
extended by 30 months, including the manufacturing, launch,
testing and operation of a fourth satellite Skynet 5D, scheduled
for launch at the end of 2012.
In Germany, a team led by Astrium Services is providing
Germany’s ﬁrst dedicated satellites for a secure communication
network. Two military-frequency satellites and a comprehensive
user ground terminal segment give the German Armed Forces(Bundeswehr) a secure information resource for use by units on
deployed missions, with voice, fax, data, video and multimedia
applications. With the ﬁrst satellite (ComSat BW1) launched in
2009, the second (ComSat BW2) in 2010, and user terminals
deployed in theatre, the system commenced operations in2010. Astrium Services, through a joint venture with ND Satcom(Astrium Services: 75%, ND Satcom: 25%) operates the systemon a long-term basis and provides additional capacity fromcommercial operators.
In Abu Dhabi, Astrium Services (together with Thales Alenia
Space) is working on a contract signed with Yahsat, a wholly
owned subsidiary of Mubadala Development Company, forthe construction of a secure satellite communication system.
Astrium Services is managing the programme and will supply
the space segment (except for the payload) and 50% of theground segment. In 2011, after the successful completion ofin-orbit testing, the ﬁrst satellite Yahsat 1A was ofﬁcially handed
over to Yahsat and the initial system acceptance milestone
was achieved. This milestone enables Yahsat to provide theUnited Arab Emirates Armed Forces with military satellite
communications capabilities. The delivery of the second
satellite, Yahsat 1B, is expected in 2012.
Geo-Information Services. Astrium Services is a providerof both optical and radar-based geo-information services tocustomers including international corporations, governments
and authorities around the world. The successful launch of
TerraSAR-X in 2007 – a radar-based Earth observation satellitethat provides high-quality topographic information – enabled
Astrium subsidiary Infoterra to signiﬁcantly expand its
capabilities by proposing new kinds of images based on radar.
TanDEM-X, its almost identical twin, was successfully launchedin 2010 and will further expand Infoterra’s product portfolio by
allowing 3D imagery.
Spot Image, a provider of satellite-based geographic informationand services (98.9% owned by Astrium), continues work on the“Astroterra programme”, which is designed to replace Spot 5(owned by the French State with an exclusive operating license
granted to Spot Image) before the end of its lifetime with a

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constellation of two Earth observation satellites (Spot 6 andSpot 7) in order to maintain high resolution capability throughto 2023. Following its successful launch in December 2011 on
a Soyuz from Kourou, the French Space Agency’s Pléiades 1A
satellite has produced its ﬁrst images. Pléiades is a very highresolution dual-use observation system for civil and militaryusers. Pléiades will be operated by CNES with commercial
distribution managed exclusively by Astrium Services’
geo-information division.
In 2011, Astrium Services was selected by ESA to design,deliver and operate the European Data Relay System (“EDRS”)
through a public-private partnership (PPP) between ESA
and Astrium. The EDRS system will be a system of two
geostationary telecommunication satellites with an associatedground segment. It is designed to reduce time delays in thetransmission of large quantities of Earth observation data andto relay information to and from non-geostationary satellites
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permanently communicate. The new space data highway will
provide Europe with independent, on demand access to Earthobservation data from low Earth orbit satellites in real-time.
EDRS operations are expected to commence with the launch of
the ﬁrst EDRS mission at the end of 2014. The European Union,
with its GMES programme and its Sentinel satellites, is intended
to be the anchor tenant for the service, with additional capacity
on the system marketed by Astrium Services to third-party
users.

Production
Astrium’s main production facilities are located in
France (Élancourt, Les Mureaux, Bordeaux, Toulouse,
Limeil-Brévannes), Germany (Backnang, Bremen,Friedrichshafen, Jena, Lampoldshausen, Ottobrunn), Spain(Madrid), the UK (Portsmouth, Stevenage, Guildford) and theNetherlands (Leiden).

1.1.5 Cassidian
Introduction and Overview
Cassidian is a worldwide leader in global security solutions andsystems, providing lead systems integration and value-added
products and services to civil and military customers around theglobe: air systems (combat aircraft, military transport, mission
aircraft and unmanned aerial systems), land, naval and joint
systems, intelligence and surveillance, cyber security, securecommunications, test systems, missiles, services and support
solutions. As a lead systems integrator, Cassidian combines
the know-how to design, develop and implement overall systemsolutions by integrating across platforms, equipment andservices.
In 2011, Cassidian recorded total revenues of € 5.8 billion,
representing 11.8% of EADS’ revenues.

Strategy
Cassidian is seeking to support the implementation of the
Vision 2020 plan by growing defence and security revenues,
improving proﬁtability to benchmark level, increasing its services
business and transforming itself into a truly global Division.
To achieve these goals, Cassidian is actively:

Implementing an Ambitious Transformation
Programme
During 2011, Cassidian introduced a far reaching transformation
programme spanning performance and cost improvements
and a new structural set up to counterbalance deteriorationand challenges from the changed business environment.
The previous Business Unit structure was replaced by a matrix
structure with a country and business line dimension to improveproximity to international markets and customers. Through the

44 I EADS REGISTRATION DOCUMENT 2011

implementation of its transformation programme along withselected investment in next generation products and services
and focused global growth, Cassidian is seeking to strengthen
its local footprint in strategic markets and improve its proﬁtability
to attain European benchmark levels.

Pursuing Future Growth Areas
Within the context of increasing budgetary constraints on
public spending in its European home markets, Cassidian willseek to maintain its leadership in core areas (such as combat
aircraft, missiles, electronics and systems) while simultaneously
targeting fast growing markets such as:
O the unmanned aerial systems market, where Cassidian isdeveloping a leading position based on its strong experienceand supported by key acquisitions which have boosted its
capabilities in this area;
O the security market, where Cassidian offers solutions suchas integrated systems for global security, comprehensive
security communications solutions and security electronics.
Project awards in the Middle East make Cassidian a world
leader in integrated nationwide security solutions. Cassidianalso made a significant move in the cyber security market bycreating a new cyber branch targeting both a product andservice offering of advanced cyber security;
O the services market, where Cassidian will seek to enhance
its offering of comprehensive packages of mission criticalservices to its customers at home and abroad. This service
portfolio ranges from consultancy, concept development andsimulation, to through-life support of aerial platforms, fleet
service/flight service, training, operation and outsourcing.

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Consolidating in Home Markets while Becoming
a Global Player
Cassidian is seeking to consolidate its position in its European
home markets (France, Germany, Spain and the UK). Withinthese markets, Cassidian will aim to leverage its technology andskills in the areas of electronics, airborne platforms, missiles
and system businesses in particular.
In addition, Cassidian is working to expand its industrial
footprint in other markets with signiﬁcant growth potential, suchas the Middle East, Brazil and India. Cassidian is targeting not
only wins of key campaigns, but also the development of a longterm industrial presence in order to be considered as a trusted
local player by potential customers.
In parallel, Cassidian will strive to increase its market share in
the key US market – in close coordination with EADS North
America – by offering superior products and technologies.
Cassidian is also building strong transatlantic industrial
partnerships with US prime contractors to explore newopportunities.

MarketMarket Drivers
The defence and security market continues to be driven by
rapidly evolving security challenges and the need to respondto new global threats. At the same time, economic conditionsin the main industrialised countries — in particular Cassidian’s
European home markets — are creating downward pressure
on budget resources for defence and security spending.
Countries must therefore balance funding priorities in order toplan for the broadest possible range of operations, including
homeland defence, stabilisation efforts, counterinsurgency andcounterterrorism operations, or nation state aggressors withgrowing sophistication and military means. This has only served
to reinforce the convergence of the traditional roles of defence
and security into a single set of customer needs, a trend that
Cassidian expects will continue.
Within the current economic climate, Cassidian believes that thestrongest opportunities for growth are in the export markets of
the Middle East, Brazil and India, among others, where defence
and security budgets are growing quickly. With increasingneeds and aging equipment, these regions have the ﬁnancial
strength necessary to make future defence and security
acquisitions.

Competition
The defence and security market is highly competitive, with
Cassidian facing competition from large- and medium-sized US
and European companies that also specialise in its key markets.
Its main competitors include Lockheed Martin, Dassault,
Boeing, Northrop Grumman, Thales, Motorola, General
Dynamics, Raytheon, other lead systems integrators andcombat aircraft manufacturers worldwide. Competitive factors
include affordability, technical and management capability, theability to develop and implement complex, integrated systemarchitectures and the ability to provide timely solutions tocustomers.

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Cassidian’s major challenge is to develop business in new
strategic geographic markets and high growth market
segments globally so as to compensate for stagnating or
declining defence budgets in its European home markets.
In 2011, Cassidian continued to accelerate its drive to globalise
its business outside of Europe while also developing nextgeneration defence and security products.

Customers
The nature of Cassidian’s business demands that it establish
long-term relationships with its customers and, where
possible, enter into strategic partnerships or joint ventureswith large international players in order to sustainably expand
the Division’s industrial footprint outside its home markets.
Key customers primarily include government and security
agencies, such as ministries of defence and the interior andsecurity forces, located not only in Cassidian’s European homemarkets but increasingly worldwide.
This includes the Middle East, where Cassidian is a key
supplier of military air systems, advanced radar technologies,
secure communications systems and large integrated systems,
as well as Brazil, where Cassidian already supplies radio
communication networks and is seeking (together with its
Brazilian joint venture partner Odebrecht) to offer defence
and security integrated systems, products and services tocustomers in Brazil and Latin America. Cassidian has alsoestablished a footprint in India in the areas of sensors, securecommunications systems and design and engineering.

Products and Services
Air Services
Cassidian offers its customers a full suite of services associatedwith operating their military air systems, including maintenance,
repair and overhaul, modernisation, logistics optimisation,
product-speciﬁc training and integrated system support
centres. In addition to these services, Cassidian offers its clientsthe possibility of upgrading their military air systems. Cassidian
has developed expertise in this area by conducting upgrade
programmes for aircraft such as the Tornado and C-160
Transall, among others.

Combat Air Systems
Euroﬁghter, known as “Typhoon” for export outside of Europe, isa network-enabled, extremely agile, high-performance multi-rolecombat aircraft optimised for swing-role operations in complex
air-to-air and air-to-surface combat scenarios. Euroﬁghter isdesigned to enhance ﬂeet efﬁciency through a single ﬂying
weapon system capable of fulﬁlling supersonic, beyond-visualrange combat, subsonic close-in air combat, air interdiction,
air defence suppression and maritime and littoral attack roles.
The Euroﬁghter GmbH shareholders and subcontractors are
EADS (46% share), BAE Systems (33% share) and Alenia
Aermacchi, a division of Finmeccanica (21% share). With regard
to series production, the respective production work sharesof the participating partners within the Euroﬁghter consortium
stand at 43% for EADS, 37.5% for BAE Systems and 19.5%
for Alenia. EADS is responsible for the centre fuselage, the

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ﬂight control system, attack and identiﬁcation as well as
communication sub-systems, the manufacturing of the rightwing and leading edge slats for all aircraft ordered under the
programme, as well as the ﬁnal assembly of the aircraft orderedby the German and Spanish Air Force.
As of 31 December 2011, 472 aircraft were ﬁrmly on order within
the core programme (with an additional 87 for export) anda total of 315 aircraft had been delivered (including 38 aircraft in2011), with production of tranche 3A secured until 2017.
Outside the core programme, further export opportunities
are believed to exist in Europe, the Middle East, Asia andthe Far East, following a government to government deal
reached between the UK and Saudi Arabia for the purchase of
72 aircraft, for which deliveries are on-going.

Mission Air Systems
Cassidian offers a full range of manned and unmanned mission
air systems. In the ﬁeld of unmanned aerial systems, Cassidian
provides tactical systems like Tracker and ATLANTE, mediumaltitude long endurance (MALE) systems like Harfang, and highaltitude long endurance (HALE) systems like EuroHawk, whichcelebrated its roll-out of the signal intelligence system in 2011.
Cassidian also worked on a next-generation system forreconnaissance and surveillance missions based on a riskreduction study awarded by France, Germany and Spain.
In the Research and Technology programme “Agile UAV-NCE”
of the German Armed Forces, Cassidian is contributing with its
Barracuda Technology Demonstrator.

Cyber Security
To meet the growing cyber security needs of users of critical IT
infrastructure, including governments and global companies,
Cassidian has established a cyber-security branch. Cassidian
provides all of the expertise and solutions to help organisations
protect against, detect, prevent and respond to cyber threats.
Cassidian has a long track record in providing the mostsensitive secure IT and data handling (e.g. ECTOCRYP) andtraining solutions to defence and security customers throughout
France, Germany, the UK and other NATO countries.

Integrated Systems
Cassidian offers comprehensive mission systems and solutionsin the areas of air dominance, battle space systems, intelligencesolutions and naval systems, as well as overall systems support.
It is a leading provider for full systems design architectureand systems integration responsibility for military and security
land-, sea-, air- and space-based systems. Cassidian designs,
integrates and implements secure ﬁxed, tactical, theatre andmobile information infrastructure solutions, including all of theservices needed to support integrated mission systems andsolutions. Cassidian is also a major designer and supplier of
C4I systems (Command, Control, Communications, Computers
and Intelligence systems).
Cassidian’s lead systems integration offering includes the ability
to design, develop and integrate the widest possible range
of individual platforms and subsystems into a single effective
network. Lead systems integration has become increasingly

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important for customers engaged in border control and coastal
surveillance, as well as for non-military customers in areas suchas homeland security, all of which are areas of major focus for
Cassidian.
Cassidian signed the world’s ﬁrst fully integrated border andmaritime security system in 2007 (the Qatar National Security
Shield), and currently it is prime contractor in Saudi Arabia on
development of a national security programme covering about
9,000 kilometres of the country’s borders. Cassidian is also
providing an integrated solution for border surveillance andsecurity for Romania,

Mission Avionics
As a major partner in the ﬁeld of military mission avionics for
the A400M, Cassidian assumes sub-system responsibility
for mission management and defensive aids. Its offering also
comprises avionics equipment, such as digital map units,
ﬂight data recording units and obstacle warning systems forhelicopters. In addition, Cassidian is developing multi-sensor
integration and data fusion technology, which is a key futuretechnology for network-enabled capabilities.

Secure Communication Systems
Cassidian is a leading provider of digital Professional Mobile
Radio (“PMR”) and secure networks with more than 200
networks delivered in 67 countries. Its solutions for PMR enableprofessional organisations in various areas – such as public
safety, civil defence, transport and industry – to communicate
effectively, reliably and securely. Cassidian offers its customers
specialised PMR solutions based on TetraPOL, Tetra and P25
technologies. Cassidian’s PMR solutions helped to secure
events like the Olympic Games in Beijing, Le Tour de France,
the soccer World Cup in South Africa and only recently in
November 2011, the G20 summit held in Cannes, France.

Sensors and Electronic Warfare
Cassidian is a principal partner in the development of airborne
multi-mode radars and provides integrated logistics support,
maintenance and upgrades. It is also heavily involved in thetechnological development and application of next-generation
active electronically scanning (AESA) radars for air, naval andground applications. In the area of air defence, Cassidian
produces mid-range radars for ship (TRS-3D/4D) and land
(TRML-3D) applications. Synthetic aperture radars (SAR)
for reconnaissance and surveillance operations and airport
surveillance radars (ASR-S) also form part of the portfolio. In
2011, Cassidian presented the SpexerTM security radar family.
In the ﬁeld of electronic warfare, Cassidian supplies electronic
protection systems for military vehicles, aircraft and civil
installations, such as laser warning, missile warning and active
electronic countermeasure units.

Test and Services
The test and services product range covers the entire life
cycle of equipment and systems and includes comprehensive
solutions that rely on test services and systems. The solutions
are either integrated or sold as stand-alone elements:
instrumentation, system software and application software.

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The versatility of test and services systems means that a
multitude of equipment and systems can be tested. Alreadypresent worldwide with its civil and military equipment testers,
Cassidian is consolidating its development strategy on theinternational stage with new locations in France, Germany,
Spain, the UK and the US, as well as a global distribution
network.

Joint Ventures
MBDA
MBDA (a joint venture between EADS, BAE Systems andFinmeccanica with stakes of 37.5%, 37.5% and 25%,
respectively) is responsible for missile systems within Cassidian.
MBDA offers superior capabilities in missile systems and covers
the whole range of solutions for air dominance, ground based
air defence and maritime superiority, while also providing
advanced technological solutions in battleﬁeld engagement.
Beyond its leading role in European markets, a strong footholdhas been established in export markets like Asia, the Gulf
Region and Latin America.
The broad product portfolio covers all six principal missile
system categories: air-to-air, air-to-surface, surface-to-air,anti-ship, anti-submarine and surface-to-surface. MBDA’s
product range also includes a portfolio of airborne
countermeasures such as missile warning and decoying
systems and decoy dispensers, airborne combat training andcountermining systems. The most signiﬁcant programmes
currently under development are the Aster Paams naval air
defence system, the METEOR air superiority missile system,
the Medium Extended Air Defence System (MEADS) andthe Scalp NAVAL ship and submarine launched deep strikeweapon. MBDA is also part of Team Complex Weapon (TCW)
to deﬁne an approach for fulﬁlling the UK’s complex weapon
requirements.

Signalis
Signalis is a provider of maritime safety and security solutions
and ofﬁcially started operating as of 1 January 2011. Signalis
regroups all activities of Sofrelog (acquired by Cassidianin 2006) and Atlas Maritime Security, a subsidiary of Atlas
Elektronik. Signalis is co-owned by Cassidian (60%) and Atlas
Elektronik (40%). Signalis provides integrated mission criticalreal-time systems using radar and other wide-area sensors,
mostly for maritime applications, typically vessel trafﬁc services
and coastal surveillance.

Atlas Elektronik
Atlas Elektronik GmbH, headquartered in Bremen (Germany),
is a joint venture of ThyssenKrupp (51%) and EADS (49%).
Atlas Elektronik provides maritime and naval solutions above

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and below the ocean surface. The company holds a leading
position in all ﬁelds of maritime high technology from commandand control systems to coastal surveillance systems andin-house support.

Larsen & Toubro
In February 2011, Indian authorities approved a joint venture
between the Indian engineering company Larsen & Toubro
and Cassidian in the ﬁeld of defence electronics (with stakesof 74% and 26%, respectively). The joint venture cooperates
closely with Cassidian’s new engineering centre in Bengaluru(inaugurated in early 2011), where systems design andengineering activities are carried out in the ﬁelds of electronic
warfare, radars and avionics for military application.

Emiraje Systems
Emiraje Systems LLC is a joint venture established in 2009
between C4 Advanced Solutions L.L.C. (C4AS) (51%), a wholly
owned subsidiary of the Emirates Advanced Investments(“EAI”) group, and Cassidian (49%) for the purpose of building
a strong lead systems integration capability within the United
Arab Emirates and bringing the most advanced C4ISR solutions
to United Arab Emirates customers and to the wider circle ofMiddle East customers. This partnership is also a cornerstoneof the EAI and Cassidian strategy to effectively address thetransfer of technology to the United Arab Emirates, which isa key factor for the successful development and operation ofstrategic and nationally sensitive defence and security systems.
In 2011, Emiraje Systems was awarded the contract for the ﬁrst
phase of development of the United Arab Emirates commandand control system (C4ISR programme).

Odebrecht
In 2010, Cassidian established a joint venture, Odebrecht EADSDefesa SA, with the Brazilian company Odebrecht (with stakesof 50% each). The objective is to offer Brazil-based solutions for
defence and security integrated systems, products and services
to customers in Brazil and other countries. This initiative mainly
focuses on engineering, production and procurement activities
which can be realised in Brazil.

Production
As a global company with strong national roots, Cassidian has
facilities in its European home markets of Germany, France,
Spain and the UK. In addition, Cassidian operates in more than
80 countries worldwide and has a worldwide network of ofﬁces
in order to secure and maintain close relationships with bothcustomers and partners. The main production sites are locatedin Germany (Manching, Ulm) and Spain (Getafe). In addition,
Cassidian operates an engineering centre in Bengaluru, India.

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1.1.6 Other Businesses
Regional Aircraft — ATR
ATR (Avions de Transport Régional) is a world leader in the
50- to 74-seat regional turboprop aircraft market. ATR is anequal partnership between EADS and Alenia Aeronautica(Finmeccanica Group), with EADS’ 50% share managed by
Airbus. Headquartered in Blagnac near Toulouse in the southof France, ATR employs more than 930 people, with major
operations in the Midi Pyrénées and Aquitaine regions ofFrance. ATR was launched in 1981.

Market
The regional turboprop aircraft industry has experienced
growing concentration over the years. During the 1990s, anumber of regional aircraft manufacturers merged, closed orceased production, leading to the withdrawal from the market
of BAe, Beechcraft, Fokker, Saab and Shorts, among others.
Currently, the worldwide market for turboprop aircraft of 50-70
seats in production is dominated by two manufacturers: ATR
and Bombardier.
After a number of years of declining activity, the regional
turboprop aircraft market has since experienced sustained
growth due to the advantages of turboprop aircraft over jet
aircraft in terms of fuel efﬁciency and CO2 emissions. In 2011,
ATR delivered 54 new aircraft (compared to 51 in 2010) andrecorded orders for 157 new aircraft (compared to 80 in 2010).
As of 31 December 2011, ATR had a backlog of 224 aircraft(compared to 165 in 2010). The current backlog represents
close to three years of deliveries, with at least 70 targetedfor 2012. The relative lower operating cost and reduced CO2
emissions of turboprop aircraft, in an ever passenger-yield
constrained environment, are expected to lead to sustained
market activity over the coming years.

Products and Services
ATR 42 and ATR 72. Commencing with the ATR 42 (50-seat),which entered service in 1985, ATR has developed a familyof high-wing, twin turboprop aircraft in the 50- to 74-seatmarket that are designed for optimal efﬁciency, operational
ﬂexibility and comfort. In 1995, in order to respond to operators’
increasing demands for comfort and performance, ATR
launched the ATR 42-500 and two years later, the ATR 72-500(70-seat) series. Like Airbus, the ATR range is based on
the family concept, which provides for savings in training,
maintenance operations, spare parts supply and cross-crewqualiﬁcation.
In 2007, ATR launched the new -600 series with improved
engines, new avionics and a new cabin. The ATR 72-600
pre-series aircraft started its ﬂight test campaign in 2009,
while the ﬁrst ﬂight of the ATR 42-600 followed in 2010.
The ATR 72-600 received certiﬁcation on 31 May 2011, and theﬁrst delivery was made on 19 August 2011. 10 ATR-600 series
aircraft were delivered in 2011.

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Customer Service. ATR has established a worldwide customer
support organisation committed to supporting the aircraft overits service life. Service centres and spare parts stocks arelocated in Toulouse, Paris, the greater Washington D.C. area,
Miami, Singapore, Bangalore, Auckland, Kuala Lumpur, Toronto
and Johannesburg.
ATR Asset Management also responds to the market forsecond-hand aircraft by assisting in the placement andﬁnancing of used and end-of-lease aircraft. By providing
quality reconditioned aircraft at attractive prices, ATR AssetManagement has helped both to broaden ATR’s customer base,in particular in emerging markets, and to maintain the residual
values of used aircraft. In the past, clients for such used aircraft
have subsequently purchased new aircraft as they have gained
experience in the operation of ATR turboprops.

Production
The ATR fuselage is produced in Naples, Italy, and ATR
wings are manufactured in Merignac near Bordeaux, France.
Final assembly occurs in Saint Martin near Toulouse on
the Airbus production site. Flight-testing, certiﬁcation anddeliveries also occur in Toulouse. ATR outsources certain
areas of responsibility to Airbus, such as wing design andmanufacturing, ﬂight-testing and information technology.

EADS Sogerma
EADS Sogerma is a wholly owned subsidiary of EADS whichis specialised in aerostructures and cabin interior activities.
The company designs and manufactures major aerostructureelements in metal and composite for commercial and military
aircraft and is also a leading provider of cockpit and passenger
seats (ﬁrst and business class) for commercial and military
aircraft as well as for business jets and helicopters.
In the aerostructures ﬁeld, EADS Sogerma engages in thedesign, manufacturing and assembly of Airbus aircraft
sections (A318/A320/A330), manufacturing and assembly of
ATR wings, design and manufacturing of the A400M ramp
door as well as design and manufacturing of pilot and co-pilot
seats. In the cabin interior segment, EADS Sogerma designs
and manufactures ﬁrst and business class seats for largecommercial aircraft.
EADS Sogerma employs approximately 2,200 people andhas three sites in France (Rochefort, Bordeaux and Toulouse),a subsidiary in Morocco (Maroc Aviation) as well as two
subsidiaries specialised in composites: CAQ (Composite
Aquitaine) in France and CAL (Composite Atlantic) in Canada.

EADS North America
EADS North America is the US-based subsidiary of EADS.
Headquartered in Herndon, Virginia, the company offers abroad array of advanced solutions for ﬁxed- and rotary-wing
aircraft, homeland and cyber security, telecommunications,defence electronics and avionics, and services. It is prime

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contractor for the US Army’s UH-72A Light Utility Helicopter.
EADS North America business operations include the activities
of: American Eurocopter Corporation; Airbus Military North
America; EADS Supply & Services; EADS North America Testand Services; Fairchild Controls Corporation and CassidianCommunications.
EADS North America’s presence in the US defence andhomeland security sectors continues to grow. EADS has
supplied more than 90 Eurocopter HH-65 helicopters to the
Coast Guard for its homeland security missions. EADS North
America is also a prime contractor for the supply of up to
36 HC-144A Ocean Sentry aircraft for Coast Guard maritime
patrol and support missions, and EADS is supplying shipboard
multimode acquisition radars for the Coast Guard’s National
Security Cutter.

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Daher-Socata
In January 2009, EADS sold a 70% stake in Socata to Daher,
while retaining the remaining 30% stake. Daher-Socata
specialises in the aerospace, nuclear, defence and industry
sectors and offers manufacturing and services solutions
combining three areas of expertise (manufacturing, services andtransport) built into a global offer.
In aerospace and defence, Daher-Socata is both a manufacturer
and a tier-1 supplier of equipment and services withapproximately 7,500 employees and a presence in 14 countries.
Daher-Socata produces aerostructures and systems, ﬁtted
sections and airframes. In the under 8.6-tonne category, it
produces aircraft with options dedicated to the civil (businessaircraft) and military (multi-role aircraft) markets.

1.1.7 Investments
Dassault Aviation
EADS holds a 46.3% stake in Dassault Aviation (listed on
the Eurolist of Euronext Paris), with Groupe Industriel Marcel
Dassault holding a 50.6% stake and a free ﬂoat of 3.1%.
Dassault Aviation itself holds a 26% stake in Thales, whichmakes it the second largest shareholder of Thales behind theFrench state.
Dassault Aviation is a major player in the world market for
military jet aircraft and business jets. Founded in 1936, Dassault
Aviation has delivered more than 8,000 military and civil aircraftto purchasers in more than 80 countries. On the basis of its
experience as designer and industrial architect of complex
systems, Dassault Aviation designs, develops and produces
a wide range of military aircraft and business jets. In order toavoid any potential conﬂict between the military products ofDassault Aviation and EADS (Rafale and Euroﬁghter) and to
facilitate a “Chinese wall” approach, EADS’ Dassault Aviation
shareholding is managed by EADS Corporate, whereas theEuroﬁghter programme is managed by Cassidian.
In 2011, Dassault Aviation recorded orders totalling € 2.9 billion(compared to € 1.3 billion in 2010), including 36 net orders for
Falcon business jets (compared to the cancellation of nineorders in 2010). Consolidated revenues amounted to € 3.3 billion
in 2011 (compared to € 4.2 billion in 2010), with consolidated
net income of € 323 million (compared to € 267 million in 2010).
Dassault has approximately 11,500 employees, of which morethan 60% are based in France.

Military Jet Aircraft
Dassault Aviation offers wide expertise in the design andmanufacturing of the latest generation military jet aircraft.
Rafale. The Rafale is a twin-engine, omni-role combat aircraft
developed for both airforce and navy applications. To date,

180 Rafale aircraft have been ordered by the French MoD.
From 2013 and onwards, the new Rafale “Omnirole” will bedelivered, with improvements such as radar, missile launchdetector and optronics.
Mirage 2000. The Mirage 2000 family reached the endof its production phase in 2006. Today, approximately
500 Mirage 2000 aircraft are in service worldwide.
nEUROn. Dassault Aviation is the prime contractor for thedevelopment of the unmanned combat air vehicle demonstrator,nEUROn. The programme was open to European cooperationand ﬁve countries have decided to participate and sharethe skills of their aerospace industries: EADS CASA (Spain),
SAAB (Sweden), HAI (Greece), RUAG (Switzerland) andAlenia Aeronautica (Italy). The nEUROn demonstrator isscheduled to make its ﬁrst ﬂight by mid-2012.
MALE UAV system. Following the French-UK joint
Declaration on Defence and Security Co-operation signed
in November 2010, Dassault and BAE Systems have agreed
to work together on the next generation of medium-altitude
long endurance (MALE) unmanned air surveillance system.
The common product would be called Telemos. Telemosis planned to have a maximum take-off weight of about 8
metric tonnes, and a wing-span of 24 metres. A jointly funded,
competitive assessment phase was conducted in 2011, with aview to new equipment delivery between 2015 and 2020.

Business Jets
Dassault Aviation offers a wide range of products at the top
end of the business jet sector. The family of Falcon business
jets currently includes the Falcon 7X, the 900 LX & EX andthe 2000 LX & S. In-service Falcons currently operate in over
65 countries worldwide, ﬁlling corporate, VIP and governmenttransportation roles.

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Aerostructures, Aircraft Conversion and Floor
PanelsEADS Elbe Flugzeugwerke GmbH — EFW
EFW is a wholly owned subsidiary of EADS (consolidated within
Airbus) and a core centre for Airbus passenger to freighter
conversion, a centre of excellence for the manufacture ofﬁbre-reinforced furnishing components as well as an importantpartner for special programmes such as the conversion of theA330 MRTT.
The conversion of passenger aircraft into freighter aircraft
is a common heavy modiﬁcation undertaken on behalf ofcommercial aircraft owners. The market for aircraft freighter
conversion encompasses freight service airlines such as FedEx,
airlines with small aircraft ﬂeets and ﬁnance groups. In theaerostructures ﬁeld, EFW is the supplier of ﬁbre reinforced ﬂatsandwich panels for all Airbus models. Its product range covers
ﬂoor and ceiling panels, cargo linings and bullet-proof cockpit
doors. EFW’s engineering department is a certiﬁed designorganisation that works to develop future products.

Aerolia
Aerolia is a wholly owned subsidiary of EADS (consolidated
within Airbus) which was formed from the spin-off of the former
French Airbus sites in Méaulte and St-Nazaire Ville pursuant
to the aerostructures reorganisation strategy initiated underPower8. Aerolia has approximately 2,300 employees who workon the design and manufacturing of around 6 million detail partsand panels and more than 500 sections of the Airbus nose
fuselage.
The standalone company operates with four operational
Directorates (Engineering, Operations, Procurement,
Programmes & Commercial) and four support Directorates(Quality, Finances, Human Resources, Strategy &Communications), which are geographically located on threesites: Méaulte (1,350 employees), St-Nazaire (650 employees)
and Toulouse (400 employees). In 2009, a fourth site waslaunched in Tunisia (target is to have 750 employees by 2014).

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The design ofﬁce, based in Toulouse, combines the skills of
approximately 250 engineers and employees, coming for themost part from the Airbus design ofﬁces.
The activities integrated in Aerolia will maintain and develop
commercial and industrial relations mainly with Airbus, while
continuing to develop relations with others such as Bombardier,
ATR, Latecoere, Sonaca, Sogerma, Stork Fokker, Piaggio,
SAAB and SABCA.

Premium AEROTEC
Premium AEROTEC is a wholly owned subsidiary of EADS
(consolidated within Airbus) which was formed from thespin-off of the former German Airbus sites in Nordenham
and Varel and the former EADS site in Augsburg pursuant
to the aerostructures reorganisation strategy initiated underPower8. Premium AEROTEC has its own development
unit with its main facilities at its Augsburg site and ofﬁces
in Bremen, Hamburg, Munich/Ottobrunn and Manching.
The management headquarters for the operational units are in
Varel, while the company itself is headquartered in Augsburg.
Premium AEROTEC GmbH is also setting up a new plant forprocessing aircraft components in Ghimbav/Brasov County
in Romania. This production unit began operations during thecourse of 2010, and is expected to be fully completed by theend of 2011. A second building section is in the pipeline.
The core business of Premium AEROTEC is focused on
structures and manufacturing systems for aircraft construction
and related development activities. The aim of Premium
AEROTEC over the coming years is to further expand its
position as the leading tier 1 supplier of civil and military aircraft
structures.
Premium AEROTEC is a partner in all major European
aircraft development programmes, such as the commercial
Airbus aircraft families, the A400M military transport aircraft
programme and the Euroﬁghter Typhoon. It plays a signiﬁcantrole in the design of new concepts in such ﬁelds as carbon
composite technologies.

1.1.8 Insurance
EADS Corporate Insurance Risk Management (“IRM”) is an
integrated corporate ﬁnance function established to proactively
and efﬁciently respond to risks that can be treated by insurance
techniques. IRM, centralised at EADS headquarters, isaccordingly responsible for all corporate insurance activities
and related protection for the Group and is empowered todeal directly with the insurance and re-insurance markets.
A continuous task of IRM in 2010 was the development, designand structure of efﬁcient and appropriate corporate and project
related insurance solutions based on the individual needs of theDivisions.

O the continuous and consistent identification, evaluation andassessment of insurable risks;

IRM’s mission includes the deﬁnition and implementation of
EADS’ strategy for insurance risk management to help ensurethat harmonised insurance policies and standards are in place

O the efficient, professional management and transfer ofthese insurable risks to protect the assets and liabilities of
EADS adequately against financial consequences due to
unexpected events.

50 I EADS REGISTRATION DOCUMENT 2011

for all insurable risks underwritten by the Group. A systematic
review and monitoring procedure is in place to assess the
exposure and protection systems applicable to all EADS sites,
aiming at:

O the initiation and monitoring of appropriate mitigation and risk
avoidance measures for identified and evaluated insurable
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An embedded reporting and information system is in place
to facilitate IRM’s ability, in close relationship with insurance
managers in charge of the Divisions, to respond to insurance
related risks of the Group. This system seeks to ensurethat insurance risk management solutions are developed
under consideration of adequate and competitive terms andconditions as well as a lean and efﬁcient administration toadequately cover the assets and liabilities of EADS.
EADS’ insurance programmes cover high risk exposure
dedicated to protect the assets and liabilities of the Group, andrisk exposure dedicated to protect employee-related risks.
Asset and liability insurance policies underwritten by IRM for theGroup cover risks such as:
O property damage and business interruption;
O aviation third party liabilities including product liabilities;
O manufacturer’s aviation hull insurance up to the replacement
value of each aircraft;
O space third party liabilities including product liabilities;
O commercial general liabilities including non-aviation and nonspace product liabilities and risks related to environmental
accidents; andO director and officer liability.
Claims related to property damage and business interruption
are covered up to a limit of € 2.5 billion per occurrence. Aviation
liability coverage is provided up to a limit of $ 2.5 billion per
occurrence, with an annual aggregate cap of $ 2.5 billion for
product liability claims. Certain sub-limits are applicable for the
insurance policies as outlined above.
Group employee-related insurance policies cover risks such as:

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O medical and assistance support during business trips andassignments;
O company automobiles; andO personal and property exposure during business trips.
Amounts insured for non-core insurance policies adequately
cover the respective exposure.
EADS follows a policy of seeking to transfer the insurable risk
of EADS to external insurance markets at reasonable rates,on customised and sufﬁcient terms and limits as provided by
the international insurance markets. All insurance policies are
required to satisfy EADS’ mandatory standards of insurance
protection.
However, to be more independent from the volatilities of theinsurance markets, EADS uses the capabilities of a corporateowned reinsurance captive as a strategic tool with respect tothe property damage, business interruption programme andthe aviation insurance programme. The captive is capitalised
and protected according to European legal requirements so as
to help ensure its ability to reimburse claims, without limiting
the scope of coverage of the original insurance policies oradditionally exposing the ﬁnancial assets of EADS.
The insurance industry remains unpredictable in terms of its
commitment to provide protection for large industrial entities.
There may be future demands to increase insurance premiums,
raise deductible amounts and limit the scope of coverage.
In addition, the number of insurers that have the capabilities andﬁnancial strength to underwrite large industrial risks is currently
limited, and may contract further in light of new solvency
requirements. No assurance can be given that EADS will beable to maintain its current levels of coverage on similar ﬁnancial
terms in the future.

O personal accidents;

1.1.9 Legal and Arbitration Proceedings
EADS is involved from time to time in various legal andarbitration proceedings in the ordinary course of its business,the most signiﬁcant of which are described below. Other thanas described below, EADS is not aware of any governmental,
legal or arbitration proceedings (including any such proceedings
which are pending or threatened), during a period covering atleast the previous twelve months which may have, or have hadin the recent past signiﬁcant effects on EADS’ or the Group’s
ﬁnancial position or proﬁtability.

WTO
Although EADS is not a party, EADS is supporting the European
Commission in litigation before the WTO. Following its unilateral
withdrawal from the 1992 EU-US Agreement on Trade in Large
Civil Aircraft, the US lodged a request on 6 October 2004 to
initiate proceedings before the WTO. On the same day, the EUlaunched a parallel WTO case against the US in relation to its
subsidies to Boeing. On 1 June 2011, the WTO adopted theﬁnal report in the case brought by the US assessing funding
to Airbus from European governments. On 1 December 2011,
the EU informed the WTO that it had taken appropriate steps tobring its measures fully into conformity with its WTO obligations,and to comply with the WTO’s recommendations and rulings.
Because the US did not agree, the matter has now beenreferred to arbitration under WTO rules. On 12 March 2012,
the WTO Appellate Body published its ﬁnal report in the casebrought by the EU concerning subsidies to Boeing. Exacttiming of further steps in the WTO litigation process is subject tofurther rulings and to negotiations between the US and the EU.
Unless a settlement, which is currently not under discussion,is reached between the parties, the litigation is expected tocontinue for several years.

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Securities litigation

GPT

Following the dismissal of charges brought by the French
Autorité des marchés financiers for alleged breaches of market
regulations and insider trading rules with respect primarily to theA380 delays announced in 2006, proceedings initiated in otherjurisdictions have also been terminated. Nevertheless, following
criminal complaints ﬁled by several shareholders in 2006
(including civil claims for damages), a French investigating judge
is still carrying out an investigation based on the same facts.

EADS has commissioned an independent investigation
into compliance allegations made in connection with oneof its subsidiaries, GPT Special Project Management Ltd.
The independent investigation remains ongoing.

CNIM
On 30 July 2010, Constructions Industrielles de laMéditerrannée (“CNIM”) brought an action against EADS
and certain of its subsidiaries before the commercial courtof Paris, alleging anti-competitive practices, breach of longterm contractual relationships and improper termination ofpre-contractual discussions. CNIM is seeking approximately€ 115 million in damages on a joint and several basis.
On 12 January 2012, the court rejected all of CNIM’s claims,
following which CNIM ﬁled for appeal.

Regarding EADS’ provisions policy, EADS recognises provisions
for litigation and claims when (i) it has a present obligation fromlegal actions, governmental investigations, proceedings andother claims resulting from past events that are pending or
may be instituted or asserted in the future against the Group,(ii) it is probable that an outﬂow of resources embodying
economic beneﬁts will be required to settle such obligation and(iii) a reliable estimate of the amount of such obligation can be
made. EADS believes that it has made adequate provisions tocover current or contemplated general and speciﬁc litigation
risks. For the amount of provisions for litigation and claims,
see “Notes to the Consolidated Financial Statements (IFRS) —Note 25C. Other provisions”.

1.1.10 Research and Technology, Intellectual Property
Research and Technology
In 2011, the EADS Corporate Technical Ofﬁce continued
to pursue many activities needed to achieve the Research
and Technology goals associated with EADS’ Vision 2020
strategic roadmap. These included pursuing strategies for key
technologies, continuing a Group-wide “green” technologies
group, increasing efforts to recruit sufﬁcient engineering talentand further improving Research and Technology management.
EADS has a Research and Technology leadership team acrossthe Divisions, implementing a streamlined approach to capturesynergies. Management focuses Research and Technology
spending on a number of larger projects, thereby ensuring
more concentrated investment of funds in strategic directions.
In addition, global Research and Technology collaboration
continued to grow outside Europe in order to access a diverse
pool of scientiﬁc and engineering expertise. Partnerships withleading research institutes expanded in Canada, India, Russia,
Singapore, China and the US.
Across EADS, 2011 was a signiﬁcant year for technology
development, with innovation ranging from future civil
technology concepts to manufacturing technologies and hybrid
propulsion.

Performance and Best Practices
The Research and Technology Strategic Approach
Strategic obligations for EADS include the development of corecompetencies and technologies for platform and platformbased systems architecture and integration. In parallel, EADS
strives to keep the innovation pipeline ﬂowing in order to replaceageing technologies and processes.

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Building on the identiﬁcation, evaluation and prioritisationof critical technologies for the Group, EADS is shaping atechnological policy that seeks to strengthen Group synergies
and is aimed at maintaining – and when needed, increasing– EADS’ Research and Technology efforts. Each Division
is responsible for proposing its own targets, as well as forsecuring public and private Research and Technology funding.
The EADS Research and Technology strategy is driven by:
O shareholder value: a stringent, leading-edge Research
and Technology portfolio that seeks to enable seamless
introduction of new technology on future products and astrong return on investment;
O customer satisfaction: high-value solutions that meet thetechnological, performance, safety and cost-competitive
pressures that challenge the future;
O upstream contribution to successful on-time, on-quality andon-price introduction of new products and processes;
O technology leadership to fuel business growth; andO societal responsibility: Research and Technology solutions
that contribute to mobility, environmental protection, safety
and security requirements.

Corporate Technical Office Organisation
The Chief Technical Ofﬁcer’s (“CTO”) mission is to be the
Research and Technology focal point for the entire Group.
The CTO ensures that business strategy and technology
strategy are closely linked. He is responsible for innovation
best practices across EADS, and also manages information

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The CTO is a member of the Executive Committee and has
responsibility for the entire Research and Technology budget
and Research and Technology production within EADS.
The CTO seeks to deliver shareholder value through a
disciplined, leading-edge Research and Technology portfoliothat enables the introduction of new technologies on future
products with strong returns on investment. The CTO’s
mandate is also to pursue innovation that addresses broader
public concerns concerning safety, security, environmental
compatibility and energy efﬁciency.
The EADS Executive Technical Council, chaired by the
CTO, is made up of the technical directors of each Division.
The Executive Technical Council is responsible for ensuring
alignment with the Group’s technology strategy andimplementation through the Group Research and Technology
roadmap. The Executive Technical Council ensures that abalance is maintained between the top-down strategic guidanceand bottom-up activities.
Group innovation networks and their leaders in the CTO’s teamreport to the Chief Operating Ofﬁcer-Innovation to ensure that
Research and Technology synergies are exploited throughout
the Divisions and at EADS Innovation Works – the Company’s
aerospace research arm. The Chief Operating Ofﬁcer-Innovationis chairperson of the Research and Technology Council,
which is made up of the Research and Technology directorsof the Divisions and Business Units, and the head of EADS
Innovation Works.
The CTO steers the EADS-wide harmonisation of transversal
technical processes, methods, tools and skills development
programmes, such as systems engineering, common tools
for product life-cycle management (PLM/Phenix) training
and qualiﬁcation. The CTO team also carries out technicalassessments on behalf of the CEO and the Executive
Committee.
The head of EADS Innovation Works reports to the CTO.
EADS Innovation Works manages the corporate Research
and Technology production that develops the Group’s
technical innovation potential from low Technology Readiness
Level (TRL) one to three. Driven by the EADS Research andTechnology strategy, EADS Innovation Works seeks to identify
new technologies and prepare them for eventual transfer tothe Divisions so as to create long-term innovation value for theGroup.
EADS Innovation Works operates two principal sites near
Munich and Paris and employs over 1,000 people – including
doctorates and university interns. Research centres aremaintained in Toulouse and Nantes (France) as well as Hamburg
and Stade (Germany) to support knowledge transfer to theBusiness Units. A liaison ofﬁce operates in Moscow, which
coordinates relations with leading Russian scientiﬁc institutes.
EADS operates Research and Technology centres in the UK,
Spain, Singapore and India. It also operates two ofﬁces in the
US and China.
EADS Innovation Works and the EADS Research andTechnology community in the Divisions maintain and continually

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grow partnerships with leading universities and high-techengineering schools through employment of thesis students,
post-graduate interns and doctorates, and through researchcontracts.

Protecting Innovation: Intellectual Property
Intellectual property – including patents, trademarks, copyrights
and know-how – plays an important role in the production andprotection of EADS’ technologies and products. The use ofIntellectual property rights enables EADS to remain competitivein the market and to manufacture and sell its products
freely, and to prevent competitors from exploiting protected
technologies. It is EADS’ policy to establish, protect, maintainand defend its rights in all commercially signiﬁcant Intellectual
property and to use those rights in responsible ways. The value
proposition of EADS’ Intellectual property is also leveraged
through EADS’ technology licensing initiative, as discussed
below.

Organisation
The general management of Intellectual property in EADS is
conducted through an Intellectual property Council led by
the EADS Chief Intellectual property Counsel. Executives
responsible for Intellectual property at the Divisions sit on thiscouncil.
Each of the Divisions and EADS Innovation Works own theIntellectual property that is speciﬁc to their particular business.
Where Intellectual property is of common interest throughout
the Group, the Division that generated the Intellectual property
may issue a licence allowing its use elsewhere (respecting
the interests of the other shareholders when appropriate).
EADS also owns Intellectual property directly or underlicence agreements with its Divisions. EADS centralises
and coordinates the Group’s Intellectual property portfolio,
participates with the Divisions in its management and promotes
licensing of common Intellectual property between the
Divisions. EADS seeks to control the protection of its Intellectual
property developed in strategic countries.

Performance and Best Practices
To increase the added value of the Group, the EADS CTO teampromotes sharing within the Group of all the knowledge of theBusiness Units and the sharing of resources, skills, researchand budget to develop new knowledge, while respecting
existing contractual and legal frameworks. For example, all of
the contracts between Business Units of the Group concerning
shared Research and Technology must have provisions allowing
for the ﬂow of knowledge (EADS Research and Technology
network rules).
In 2011, the EADS Intellectual property portfolio comprised
approximately 9,500 inventions (approximately 9,000 in 2010),
which are covered by more than 33,000 patents throughout
the world. 1,018 priority patents were ﬁled in 2011, which
gives an indication of the greater momentum in Research andTechnology and product development. For international patent
protection, EADS uses the Patent Cooperation Treaty, which
provides a simpliﬁed system for international patent ﬁling.

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In 2009, EADS launched its technology licensing initiative,
which provides access to a wide range of technologies tohelp companies outside the Group to develop new products,
improve production methods and expand their market

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opportunities. EADS’ technology licensing initiative seeks togenerate revenues by exploiting EADS’ large patent portfolio
and related know-how.

1.1.11 Environmental Protection
Protection of the environment is a global priority that requires
engagement and responsibility by citizens, government andindustry, often working together in partnership. Eco-efﬁciency
is therefore a major goal of EADS’“Vision 2020” strategic
roadmap, which aims at maximising the beneﬁts of EADS’
products and services for customers and other stakeholders
while minimising the environmental impact of manufacturing
and operating these products throughout their life cycle.
The implementation of further innovative and eco-efﬁcienttechnologies and processes is a key factor in ensuring EADS’sustainability, increasing the attractiveness of its products andits overall competitiveness, beneﬁting growth, safeguarding
employment and creating added value for all stakeholders.
EADS continuously pursues eco-efﬁciency by seizing “green”
business opportunities, seeking to mitigate the environmental
impact of EADS’ activities and products throughout their life
cycle, developing breakthrough technologies, products andservices and, more generally, integrating environment into its
business.

Organisation
While each Division, Business Unit and corporate function
remains responsible for the implementation of EADS’environmental policy in pursuit of eco-efﬁciency, EADS
Corporate Environmental Affairs ensures the consistency ofthe various initiatives Group-wide. This newly created teamis intended to leverage capabilities, avoid duplications ofresponsibility, limit the capacity needed to provide an expanded
service and strengthen EADS’ responsiveness by:
O anticipating environmental issues, monitoring and sharing
information on emerging trends globally and on legislative
activity concerning environmental matters;
O supporting the lobbying and communication activities of theDivisions on environmental issues in their respective sectors,
and helping to co-ordinate a Group-wide position whennecessary;O catalysing the sharing of best practices and fosteringcommunications within the environmental network; andO complying with the Group’s reporting obligations, andensuring a homogeneous quality of standard of reporting by
the Group’s entities.
This department takes over the coordination mission of the
EADS Environmental Network composed of representativesof the main business areas. Working groups on speciﬁc

54 I EADS REGISTRATION DOCUMENT 2011

topics have been established in areas such as Environmental
Reporting, REACH and Design for Environment/Life Cycle
Practices.
EADS strives to develop joint initiatives within industry inorder to improve the overall environmental performance of
the aerospace and defence industry in the most effective,
consistent and cost-efﬁcient manner possible. EADS supported
the creation of the International Aerospace Environmental Group(IAEG) in order to harmonise industry responses to existingand emerging environmental regulations, align aerospaceenvironmental standards and work on a common approach andexpectations for the supply chain.
EADS leads or participates in various European andinternational environmental working groups such as ICAO,
ATAG, ICCAIA, ASD, CAEP and WEF, and in environmental
working groups of national industry organisations such as
GIFAS in France, TEDAE in Spain, BDLI in Germany and ADS in
the UK.

EADS Eco-Efficiency Approach
The eco-efﬁciency concept is about maximising economic
value creation while minimising environmental impact. It wasﬁrst deﬁned by the World Business Council for Sustainable
Development (WBCSD) as a “Concept of creating more goods
and services while using fewer resources and creating lesswaste and pollution”.
EADS’s prominence in aerospace makes it a central player ofthe sustainable mobility issue and more broadly, of the evolution
towards a “green economy”. The Group has committed
to moving towards an eco-efﬁcient enterprise and has
established a Corporate Environmental Roadmap to support
this effort through a series of concrete projects and actions.
This dictates regulatory compliance and continuous
improvement in environmental management, and deﬁnes
speciﬁc goals of eco-efﬁcient operations, products and services
to be achieved by 2020.
For EADS, achieving its targets involves two key elements:
O Integration of environment into business. An ecoefficient approach being the reconciliation of environmental
protection with business opportunities, it is therefore key tofully integrate environment into business, enabling decisionmaking in key processes to also be driven by environmental
considerations. This is especially the case with investment
processes, which are currently being reviewed to integrate
relevant environmental criteria; andINFORMATION ON EADS’ ACTIVITIESPRESENTATION OF THE EADS GROUP

1O Performance operational goals (against 2006 baseline).
80% reduction of water discharge; 50% reduction of waste,water consumption, CO2 and volatile organic compound(VOC) emissions; 30% reduction of energy consumption;
20% sourcing of energy from renewable sources; pursuitof Advisory Council for Aeronautics Research in Europe(ACARE) research goals for aviation and the various definedgoals for other products; and development of eco-efficientsolutions for core and adjacent customer segments thatprovide sustainable value creation for the Company.

Products and Services
A lifecycle-oriented approach takes into account all stages ofthe life of a product or service, from the design of the product tothe end of its lifetime. EADS’ main target is to design or identify“true” environmentally-friendly solutions, which avoid pollution
transfers from one stage of the lifecycle to the other.

Designing for the Environment
The environment is part of top-level requirements for the designof any new product. One major strand of the EADS’ Research
and Technology efforts is therefore to investigate, test, validate
and optimise the most advanced technologies, design features,
conﬁgurations and architectures. This is intended to lead toaircraft that generate fewer emissions and less noise, while
carrying a maximum payload over the mission range.
In addition to optimising propulsion systems and overall
aerodynamic efﬁciency, the continuous and progressive
introduction of advanced materials and new manufacturing
processes also reduces the weight of an aircraft, and therefore
its fuel consumption and corresponding engine emissions.
For example, the A380 is the ﬁrst commercial aircraft toincorporate as much as 25% composites. The carbon-ﬁbre
reinforced plastic composite centre wing box has saved up to
1.5 tonnes. As a result, with less than 3 litres per passenger
per 100 kilometres, the A380 has very low fuel burn. Reducing
noise is equally important. The company is working on nacelledesigns, acoustic treatments and engine technologies aiming to
reduce noise, hand-in-hand with engine manufacturers.

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thereby offsetting emissions when they are burned. EADS has
been working with universities, fuel companies and start-up
companies, as well as standard-setting organisations, todevelop “drop-in” biofuels (that work with existing aircraft andinfrastructure). Airbus has four value chain projects in place,with Tarom (Romania), Iberia (Spain), Qatar Airways (Qatar),
TAM (Brazil), three on the verge of a breakthrough in China,
India and Australia, and is pursuing projects in South Africa andCanada. It also supports airlines, such as Lufthansa, Air France,
Interjet and others with their commercial operations using
biofuels and is co-leading a key project with the EU to preparea feasibility study and road map to ensure two million tonnes of
biofuel availability for aviation in the EU by 2020.
EADS is dedicated to the development and support ofmodern air trafﬁc management systems, with the overall
objective being to allow a sustainable growth of air transport.
EADS is interacting with and helping to develop air trafﬁcmanagement programmes such as “Single European Sky ATM
Research” (SESAR) in Europe, as well as NextGen in the US.
In 2011, Airbus launched a new subsidiary company called“Airbus ProSky”, dedicated to the development and support ofmodern air trafﬁc management systems.
Modern aircraft using innovative technologies, biofuels,
optimised air trafﬁc and ﬂight procedures, can all lead to asigniﬁcant drop in CO2 emissions. This has been shown by
Air France and Airbus, which completed the world’s greenest
commercial ﬂight on 13 October 2011, using an Airbus A321
from Toulouse to Paris. CO2 emissions were cut in half
compared to a usual ﬂight (2.2 l/passenger/100 km).

Environmental Management(ISO 14001/ EMAS)

An example of an initiative launched by Eurocopter is the
CORINE project, the objective of which is to supply small andmedium enterprises with a collaborative eco-design tool shared
between contractors and suppliers, to allow the identiﬁcationand integration of new materials and processes all along thehelicopter life cycle.

ISO 14001 is an internationally recognised standardof environmental management system efﬁciency forbusinesses and organisations. EADS encourages not only
the environmental certiﬁcation of its operations but also thedevelopment of a full life cycle orientation for its products andservices, as this remains the most cost-efﬁcient and practical
way to effectively reduce environmental impacts. Certiﬁed
environmental management systems have been progressively
implemented across EADS’ manufacturing sites, and over 90%
of EADS’ employees operate under an ISO 14001. The site andproduct life cycle orientation of the environmental management
system attempts to create economic value by reducing
environmental costs and exposure at each stage of the productlife, from design to operations up to end of life.

Operating in the Most Efficient Way

In 2011, further progress was achieved:

The most obvious way to cut CO2 emissions is to reduce
fuel consumption. This can be done through improvements
in aircraft technologies as well as streamlining air trafﬁcmanagement. Alternative fuels are one of many options, andEADS believes these should be primarily reserved for aviation as
there are no other viable alternative energy sources foreseen in
the coming years.

O Astrium GmbH has a global certification which encompasses
Astrium Satellites and Astrium Space Transportation;

EADS is pioneering sustainable biofuels, made from bio-massfeedstock that give off (or use) carbon dioxide as they grow,O ATR has enlarged its certification to ATR 42-500/600 and
72-500/600 life cycle;

O in the UK, Astrium was re-certified to ISO 14001 andOHSAS 18001 as a joint certification, the certification
covering the sites of Portsmouth, Stevenage and the facilities
department at Poynton;

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O Cassidian has undertaken an inventory approach for its
Finnish sites, with the objective to obtain an ISO 14001
certification around 2013;
O in addition, Eurocopter has planned ISO 14001 certification
for Canada, Brazil, Singapore and Romania in 2012.
Monitoring of the various achievements against objectives isbeing performed through the collection of a set of indicators.
Consistency and reliability of the reporting exercise isbeing ensured through corporate procedure and guidelines
derived from GRI requirements combined with an advanced
environmental management information system that is
operational within EADS worldwide.

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CO2 emissions. Elsewhere in Spain, Getafe’s Centre forPrototype Aircraft has pipes for geo-thermal heating which
run through thermo-active foundations, avoiding the need for
any CO2-generating fossil fuel use in heating the building;
O at Eurocopter, the construction work of a unique high-techplatform emphasises environmentally-friendly and innovative
construction. The building features geo-thermal heating andgroundwater cooler, as well as “green” roods that can bewalked on. There will also be several charging stations forelectric vehicles. Eurocopter’s Marignane site in France also
performed the installation of solar panels.

Hazardous Substances Management
Reducing EADS’ Industrial Environmental
ImpactIn order to meet stakeholders’ increasing demands forenvironmental impact related information and further movement
towards eco-efﬁcient industrial activities, and in anticipation of
more stringent reporting regulations, it is essential for EADS tocommunicate on its environmental impact, and on the reduction
projects implemented through the Divisions to achieve the2020 targets. The EADS-wide environmental reporting system
was implemented four years ago; organised around clear
guidelines derived from Global Reporting Initiative (GRI) as wellas greenhouse gas protocol requirements, it provides a statusof the Group’s environmental performance and enables themonitoring of progress achieved. The reporting process and theenvironmental data of EADS are externally audited every year.
This year, numerous initiatives have been launched at theDivision and site level to reduce the environmental footprint of
the Company by 2020, in particular:
O Airbus’ BLUE-5 initiative, which provides a roadmap for
reducing the environmental footprint of Airbus by 2020 on
the five aspects of EADS Vision 2020: energy consumption,
CO2 emissions, waste production, water consumption anddischarges and volatile organic compound emissions;
O Astrium’s set-up of a multi-functional working group
Production/Facility Management/Design, with the aim ofmaking environmental performance a decision driver for new
production means;O optimisation of the ventilation system at the A380 paintshop,
resulting in a reduction of energy consumption by
50,000 kilowatt hours during the 16-day processing time for
an A380; a 32-tonne reduction of CO2 emissions per aircraft,and considerable savings on fuel costs;
O in San Pablo, Spain, the installation at the A400M final
assembly line of 18,000 m2 of solar panels providing 10%of the plant’s total electricity needs without producing any

56 I EADS REGISTRATION DOCUMENT 2011

The European REACH (Registration, Evaluation andAuthorisation of Chemicals) regulation (EU No. 2007/1906)
came into force on 1 June 2007. REACH aims at improving
the protection of human health and the environment throughcloser regulation of chemical use by industry; it replaces thepre-existing EU regulatory framework on chemicals. REACH
introduces a range of new obligations over a period of 11 years
which are intended to reduce risk that the 30,000 mostfrequently used chemicals may cause. The regulation will also
bring about the phased withdrawal from use of some of thesubstances that are considered to be of very high concern forhuman health and environment.
Taking on the lessons learned from the management of the
RoHS and WEE directives and in order to provide a consistentand cost-efﬁcient compliance approach for the whole Company
and support its supply chain, a dedicated working group has
been created as part of the EADS environmental network whichbrings together all EADS business areas.
EADS and its Divisions are also joining forces at theinternational level together with other major international
aerospace companies to further structure the entire sector’scompliance approach. One such initiative was the creationof the International Aerospace Environmental Group (IAEG)
to harmonise industry responses to existing and emerging
environmental regulations, align aerospace environmental
standards and work on a common approach for the supply
chain.
An internal EADS REACH audit has been conducted to assess
progress of the Divisions in meeting their obligations under
the REACH regulation, and intensive efforts were devoted
to improve exchanges of best practices and to allow thequaliﬁcation of the most standardised possible solutions. While
proactively moving towards the elimination of these substances,
EADS and its Divisions are committed to the highest achievable
control of emissions, in full compliance with the applicableregulatory framework.

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1.1.12 Employees
At 31 December 2011, the EADS workforce amounted to133,115 employees (compared to 121,691 employees in 2010
and 119,506 employees in 2009), 96.5% of which consisted offull time employees. Depending on country and hierarchy level,
the average working time is between 35 and 40 hours per week.
In 2011, 8,238 employees worldwide joined EADS (comparedto 5,047 in 2010 and 5,663 in 2009). At the same time,
3,666 employees left EADS (compared to 3,213 in 2010
and 3,308 in 2009).

Employees by Division

AirbusIn total, 92.1% of EADS’ active workforce is located in Europe
on more than 100 sites.

Workforce by Division and Geographic Area
The tables below provide a breakdown of EADS employees
by Division and geographic area, including the percentage ofpart-time employees. Employees of companies accounted forby the proportionate method (such as ATR, MBDA) are includedin the tables on the same proportionate basis.
31 December 201131 December 201031 December 2009

69,30062,751

61,987

Eurocopter

20,75916,76016,316Astrium

16,623

15,34014,624

Cassidian20,923

21,181

21,093

Headquarters

2,665

2,430

2,285

Other Businesses
Total EADS

Employees by geographic area

France

2,845

3,229

3,200

133,115

121,691

119,506

31 December 201131 December 201031 December 2009

48,39445,58044,760Germany

47,051

43,96643,814

Spain

10,701

10,498

10,469UK

13,467

12,813

12,733

Italy

480

487

483

US

2,829

2,692

2,512

Other Countries

10,193

5,655

4,735

Total EADS

133,115

121,691

119,506

31 December 201131 December 201031 December 2009

% Part time employees

France

4.1%

4.1%

4.1%

Germany

3.9%

3.7%

3.4%

Spain

0.9%

0.7%

1.0%

UK

2.2%

2.1%

2.0%

US

1.4%

0.7%

1.3%

Other Countries

2.8%

2.8%

3.0%

Total EADS

3.5%

3.4%

3.3%

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1.1.13 Incorporation by Reference
The English versions of the following documents shall bedeemed to be incorporated in and form part of this Registration
Document:
O the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2009, together with the related notes,
appendices and Auditors’ reports, as incorporated byreference in the Registration Document filed in English with,and approved by, the AFM on 21 April 2010 and filed in
English with the Chamber of Commerce of The Hague;
O the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2010, together with the related notes,
appendices and Auditors’ reports, as incorporated byreference in the Registration Document filed in English with,and approved by, the AFM on 19 April 2011 and filed in
English with the Chamber of Commerce of The Hague; andO the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2011, together with the related notes,
appendices and Auditors’ reports.
Copies of the above-mentioned documents are available free ofcharge upon request in English, French, German and Spanish
at the registered ofﬁce of the Company and on www.eads.com(Investor Relations > Events and Reports > Annual Report andRegistration Document).
Copies of the above-mentioned Registration Documents
are also available in English on the website of the AFM
on www.afm.nl (Professionals > Registers > Approved
prospectuses). The above-mentioned ﬁnancial statements
are also available in English for inspection at the Chamber ofCommerce of The Hague.

1.2 Recent Developments
EADS Board of Directors Announces Future
Top Management Appointments and Board
Composition
On 26 January 2012, the Board of Directors announced thatit had designated Tom Enders to take over the role of CEO
when Louis Gallois steps down at the end of his mandate.
Concurrently, Arnaud Lagardère will assume the role of
Chairman of the Board presently held by Bodo Uebber.
The change-over was prepared diligently by the Board of
Directors and results from the application of the succession
process under the governance of EADS, which was updatedin October 2007. It will take place after EADS’ Annual General
Meeting of Shareholders to be held on 31 May 2012. These newmandates will carry a ﬁve-year term.
Following the recommendations of the Remuneration and
Nomination Committee, the Board of Directors also announced
further evolutions of the management team effective
1 June 2012:
O Fabrice Brégier will succeed Tom Enders and become CEOof Airbus, EADS’ largest Division, and Günter Butschek,
presently Head of Operations of Airbus will be affected to theposition of COO of Airbus;

58 I EADS REGISTRATION DOCUMENT 2011

O Harald Wilhelm will become Chief Financial Officer (CFO) of
EADS, alongside his present role as CFO of Airbus, following
the request of Hans Peter Ring to retire from the Company
and pursue other objectives;
O Marwan Lahoud, whose mandate comes up for renewal,
will be reappointed as Chief Strategy and Marketing Officer(CSMO);O Thierry Baril will assume the role of Head of Human
Resources (HR) for EADS; he will retain his duties as Headof Airbus HR together with his expanded responsibility.
Jussi Itävuori leaves the Company after ten years as Head of
HR for EADS.
As for the Board of Directors, most current Board Members will
stand for re-appointment, carrying the experience gained overthe last ﬁve years into the new Board of Directors. The following
names will be proposed for appointment by the Annual General
Meeting of Shareholders to be held on 31 May 2012: Arnaud
Lagardère, Tom Enders, Hermann Josef Lamberti, Sir John
Parker, Michel Pébereau, Lakshmi Mittal, Bodo Uebber, Wilfried
Porth, Dominique D’Hinnin, Jean-Claude Trichet and Josep
Piqué i Camps. Juan Manuel Eguiagaray and Rolf Bartke havechosen not to stand for reappointment.

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Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
2.1 Operating and Financial Review

62

2.1.1 Overview

62

2.1.2 Critical Accounting Considerations, Policies and Estimates63

2.1.3 Measurement of Management’s Performance68

2.1.4 Results of Operations72

2.1.5 Changes in Consolidated Total Equity (Including Non-Controlling Interests)

77

2.1.6 Liquidity and Capital Resources78

2.1.7 Hedging Activities

85

2.2 Financial Statements

87

2.3 Statutory Auditors’ Fees88

2.4 Information Regarding the Statutory Auditors

88

EADS REGISTRATION DOCUMENT 2011 I 61

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOPERATING AND FINANCIAL REVIEW

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2.1 Operating and Financial Review
The following discussion and analysis is derived from and should be read
together with the audited Consolidated Financial Statements (IFRS) of EADS
as of and for the years ended 31 December 2011, 2010 and 2009 incorporated
by reference herein. These ﬁnancial statements have been prepared inaccordance with International Financial Reporting Standards (“IFRS”) issued
by the International Accounting Standards Board as endorsed by the European
Union, and with Part 9 of Book 2 of the Dutch Civil Code.
2.1.1 Overview
With consolidated revenues of € 49.1 billion in 2011, EADSis Europe’s premier aerospace and defence company andone of the largest aerospace and defence companies in theworld. In terms of market share, EADS is among the top
two manufacturers of commercial aircraft, civil helicopters,commercial space launch vehicles and missiles, and aleading supplier of military aircraft, satellites and defence
electronics. In 2011, it generated approximately 76% of its total
revenues in the civil sector (compared to 73% in 2010) and
24% in the defence sector (compared to 27% in 2010). As of
31 December 2011, EADS’ active headcount was 133,115.

2.1.1.1

Exchange Rate Information

The ﬁnancial information presented in this document isexpressed in euros, US dollars or pounds sterling. The following
table sets out, for the periods indicated, certain information
concerning the exchange rate between the euro and the US
dollar and pound sterling, calculated using the ofﬁcial European
Central Bank ﬁxing rate:

AverageYear EndYear ended€ -US$€ -£€ -US$€ -£31 December 2009

1.39480.89091.44060.888131 December 2010

1.32570.85781.33620.860831 December 2011

1.39200.86791.29390.83532.1.1.2 Reportable business segments
EADS organises its businesses into the following ﬁve reportablesegments:
O Airbus Commercial: Development, manufacturing,marketing and sale of commercial jet aircraft of more than
100 seats and related services; aircraft conversion;
O Airbus Military: Development, manufacturing, marketing andsale of military transport aircraft and special mission aircraft
and related services;
The reportable segments, Airbus Commercial and Airbus
Military, form the Airbus Division. The effect of internal
subcontracting between Airbus Commercial and Airbus Militaryis eliminated in the consolidated ﬁgures of the Airbus Division;

62 I EADS REGISTRATION DOCUMENT 2011

O Eurocopter: Development, manufacturing, marketingand sale of civil and military helicopters and provision ofhelicopter-related services;
O Astrium: Development, manufacturing, marketing and sale ofsatellites, orbital infrastructures and launchers and provisionof space-related services; andO Cassidian: Development, manufacturing, marketing andsale of missile systems, military combat aircraft and training
aircraft; provision of defence electronics and global security
market solutions such as integrated systems for global
border security and secure communications solutions andlogistics; training, testing, engineering and other related
services.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOPERATING AND FINANCIAL REVIEW

1“Other Businesses” mainly consist of the development,
manufacturing, marketing and sale of regional turboprop
aircraft, aircraft components as well as the Group’s activities
managed in the US.

2.1.1.3 Significant Programme Developments
in 2009, 2010 and 2011
A380 programme. In 2009, the A380 programme weighed
signiﬁcantly on underlying performance. Following completionof an industrial and ﬁnancial review on the programme, certain
deliveries were rescheduled and an additional loss-making
contract provision of € -0.2 billion (before foreign exchange
effects) was recorded to reﬂect both this shift as well as anincrease in recurring costs. Beyond the adjustment of theprovision, on-going ﬂeet support, inefﬁciencies and underabsorption of ﬁxed costs had a negative impact on 2009
performance. In 2010, EADS made signiﬁcant progress on thelearning curve, leading to an improvement of the gross margin
per aircraft in 2010. However, the A380 programme continued
to weigh signiﬁcantly on underlying performance.

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A400M programme. During 2009, negotiations among EADS/
Airbus/AMSL, OCCAR and the launch nations addressedvarious aspects of a new programme approach for the A400M.
Based on different elements and the best estimate of EADS’management at the time of the related year-end closing
procedures, an additional loss-making contract provisionand charges totalling € -1.8 billion were recorded in 2009,
bringing the total EBIT* impact of the programme on EADS
to € -4.0 billion as of 31 December 2009. On 5 November
2010, EADS/Airbus/AMSL, OCCAR and the launch nations
concluded their negotiations, with an amendment to the A400M
programme contract subsequently ﬁnalised on 7 April 2011.
The on-going technical progress on the A400M programme
resulted in the recognition of A400M-related revenues of€ 1.0 billion in 2010, including a partial utilisation of the A400M
loss provision of € -157 million. Further technical progress on
the A400M programme resulted in the recognition of A400Mrelated revenues of € 0.8 billion in 2011.

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2.1.1.4 Trends

A350 XWB programme. In 2011, the A350 XWB programme
entered into the manufacturing phase. Manufacturing andpre-assembly of the A350 XWB-900 progressed across all
pre-ﬁnal assembly sites, with the ﬁrst major airframe sectionsdelivered to the A350 XWB ﬁnal assembly line in Toulouse at
the end of 2011.

Airbus announced that it would increase the monthly production
rate for its A320 family to 42 per month in the fourth quarterof 2012, following the increase to 40 per month achieved in
the ﬁrst quarter of 2012. The monthly production rate for theA330 family will increase to the rate of 10 per month in thesecond quarter of 2013, following the increase to nine permonth achieved in the ﬁrst quarter of 2012; a further increase
to 11 per month in the second quarter of 2014 is currently
planned, provided the inclusion of aircraft operations in theEuropean Union Emissions Trading Scheme (from 2012) does
not harm aircraft orders. Airbus is targeting approximately 570
commercial aircraft deliveries in 2012, as well as a level of grossorders that is above deliveries. Any major production or market
disruption or economic downturn could lead to revision of theseﬁgures.

Following a programme review in the second half of 2011, EADS
recorded an adjustment on the loss-making contract provisionof € 0.2 billion to reﬂect the entry into service currently targeted
for the ﬁrst half of 2014. The A350 XWB programme is very
challenging; the schedule is tightening as Airbus progresses
towards its next milestones, particularly entry into the ﬁnal
assembly line.

Underlying performance in 2012 should reﬂect volume increases
at Airbus and Eurocopter, better pricing at Airbus and A380
margin improvement. Going forward, the EBIT* and earnings
per share performance of EADS will be dependent on theGroup’s ability to execute on its complex programmes such as
A400M, A380 and A350 XWB, in line with the commitments
made to its customers.

In 2011, EADS made continued progress on the learning curve,
leading to a further improvement of the gross margin per aircraft(though still negative). Following the discovery of hairline cracks
in the wing rib feet of certain A380 aircraft currently in service,
management is devoting maximum attention to solving theissue. The costs of repair will be borne by Airbus; a provision of€ 105 million for estimated warranty costs for delivered aircraft
has been recorded in 2011.

2.1.2 Critical Accounting Considerations, Policies and Estimates
2.1.2.1 Scope of and Changes
in Consolidation Perimeter
Acquisitions and disposals of interests in various businesses canaccount, in part, for differences in EADS’ results of operations for
one year as compared to another year. The overall 2011 revenue
contribution from the ﬁrst consolidation of major acquisitions
was around € 300 million, mainly from Vector Aerospace andSatair, while the EBIT* impact was insigniﬁcant. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 4:
Acquisitions and disposals”.

Acquisitions
On 21 December 2011, Astrium announced that Astrium
Holding S.A.S. acquired 66.8% of Space Engineering, Rome
(Italy), a specialist in digital telecommunications, RF and antenna
equipment engineering for both space and ground based
applications. The completion of this transaction is subject tocustomary conditions, including regulatory approvals.
On 19 December 2011, Astrium Holding S.A.S. acquired 100%of MobSat Group Holding S.A.r.l., Munsbach, Luxemburg, being
the ultimate parent company of Vizada group (“Vizada”), fromEADS REGISTRATION DOCUMENT 2011 I 63

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1a consortium of investors led by Apax France, a French private
equity fund and the former majority shareholder. Vizada is acommercial satellite service provider offering mobile and ﬁxed
connectivity services from multiple satellite network operators.
The total consideration paid by Astrium included € 413 million
for the acquisition of Vizada’s equity instruments as well as€ 325 million due to a mandatory extinguishment of the former
Vizada debt structure.
On 20 October 2011, Airbus Operations GmbH acquired 74.9%of the shares and voting rights of PFW Aerospace AG, Speyer,
Germany, the ultimate parent company of PFW AerospaceGroup, for a total consideration of € 4 million primarily arisingfrom impacts due to the separate recognition of settlements ofpre-existing relationships.
On 19 October 2011, Airbus Americas, Inc. acquired 100% of
the shares and voting rights of Metron Holdings, Inc., Dulles,
Virginia (USA), the ultimate parent company of Metron Aviation,a provider of air trafﬁc ﬂow management solutions, from its
management team and two institutional investors for a total
consideration of € 55 million.
On 5 October 2011, Airbus S.A.S. obtained control of Satair
A/S, Copenhagen, Denmark (“Satair”), an independent
distributor of aircraft part and services, following a public
voluntary conditional tender offer of DKr 580/share for allof the outstanding shares of Satair, including an offer of
DKr 378.66/warrant for each warrant holder. As a result of
the public voluntary offer EADS acquired 98.5% of Satair’s
shares during October and November 2011, while theremaining 1.5% of Satair’s shares were acquired via linked
squeeze out procedures ﬁnalised on 6 February 2012. The
total consideration of € 351 million for this acquisition includes€ 346 million paid in cash for 98.5% of Satair’s shares and 100%of warrants during October and November 2011 as well as an
amount of € 5 million paid to the remaining shareholders (1.5%of Satair’s shares) within the linked squeeze out procedures.
On 30 June 2011, Eurocopter Holding S.A.S. acquired 98.3%
of Vector Aerospace Corporation, Toronto (Canada)(“Vector”),
following a CAD 13.00/share cash offer for all of the outstanding
common shares of Vector, including all shares that could be
issued on the exercise of options granted under Vector’s shareoption plan. The remaining 1.7% shares of Vector were acquired
via linked squeeze out procedures ﬁnalised on 4 August 2011.
The total consideration for this independent global provider oforiginal equipment manufacturer (OEM) approved maintenance,
repair and overhaul (MRO) aviation services includes theamount paid in cash for the acquisition of 98.3% of Vector’sshares (€ 452 million) at the end of June 2011 as well as theamount of € 8 million paid to the remaining shareholders withinsqueeze out procedures.
On 9 June 2011, Cassidian increased via EADS DeutschlandGmbH, Ottobrunn, Germany, its 45.0% shareholding in
Grintek Ewation (Pty) Ltd., Pretoria, South Africa, a systemengineering company, by acquiring a 42.4% stake formerly
held by Saab South Africa Ltd., Centurion, South Africa, for€ 21 million within a step-acquisition. A 12.6% shareholding
is still held by Kunene Finance Company (Pty.) Ltd., Gauteng,South Africa, a South African private equity investor.

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On 7 June 2011, EADS N.V. purchased the remaining 25% of
DADC Luft- und Raumfahrt Beteiligungs AG, Munich (Germany),
from Daimler Luft- and Raumfahrt Holding AG, Ottobrunn, for a
total consideration of € 110 million.
On 10 May 2011, the GEO Information Division of Astrium
Services (formerly Spot Image and Infoterra) expanded its
investment in i-cubed LLC, Fort Collins, Colorado (USA),a provider of imagery and geospatial data management
technologies and services, from 25.6% to 77.7% by a stepacquisition of the additional 52.1% for € 6 million via its US
subsidiary SPOT Image Corporation, Chantilly, Virginia (USA).
On 28 February 2011, Astrium Services GmbH obtained
control of ND SatCom GmbH, Immenstaad (Germany), a
supplier of satellite and ground systems equipment andsolutions, by acquiring 75.1% of the shares and voting interestsin the Company for a total consideration of € 5 million fromSES ASTRA.
On 11 January 2011, Cassidian and Atlas Elektronik GmbH,
Bremen, Germany (“Atlas Elektronik”), a joint venture ofThyssenKrupp AG and Cassidian, completed the merger of theirmaritime safety and security activities formerly carried out via
their separate subsidiaries Sofrelog and Atlas Maritime Security.
The new company named SIGNALIS was set up as a mediumsized corporation which will be co-owned by Cassidian (60%)
and Atlas Elektronik (40%).
On 3 December 2010, Astrium GmbH acquired Jena-Optronik
GmbH, Jena (Germany), one of the international leading
providers of space sensors and opto-electronic instruments.
On 1 October 2009, Atlas Elektronik GmbH acquired via
its subsidiary Atlas Elektronik UK, the underwater systems
business of QinetiQ based in Winfrith, Dorset (United Kingdom).
During 2009, EADS increased its share in Spot Image basedin Toulouse (France), a world leader in the provision of satellite
imagery and geo-information value-added services, from
81% to 96% by acquiring further shares from non-controllingshareholders. In 2010, further purchases of shares led to anincrease in EADS’ share in Spot Image to 99%.

Disposals
On 13 May 2011, EADS North America, Inc. sold its subsidiary
EADS North America Defense Security and Systems Solutions,Inc., San Antonio, Texas (USA), to Camber Corporation,
Huntsville, Alabama (USA).
On 31 December 2010, Cassidian Air Systems sold its shares in
ASL Aircraft Services Lemwerder GmbH to SGL Rotec GmbH& Co. KG, which intends to establish a production line for rotor
blades at the Lemwerder site. The programme related assets
and liabilities of the Euroﬁghter, Tornado, A400M and C160
programmes were transferred to Premium Aerotec GmbH.
On 7 January 2009, EADS sold 70% of the shares in Socata to
Daher. The remaining 30% of Socata is accounted for using theequity method and presented in “Other Businesses”.
On 5 January 2009, EADS sold its Airbus site in Filton (UK) to
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2.1.2.2 UK Pension Commitments
In the UK, the different pension plans in which EADS
participates are currently underfunded. Accordingly, EADS
has recorded a provision of € 0.9 billion as of 31 December
2011 (compared to € 0.6 billion as of 31 December 2010) for its
current share of the net pension underfunding in these plans.
A related amount of actuarial gains and losses (cumulative) of€ -1.0 billion has been recorded in total equity (net of deferredtaxes) as of 31 December 2011 (compared to € -0.8 billion as of
31 December 2010) in accordance with IAS 19.
For further information related to EADS’ participation in pension
plans in the UK, see “Notes to the Consolidated Financial
Statements (IFRS) — Note 25B: Provisions for retirement plans”.

2.1.2.3 Fair Value Adjustments
The merger of the operations of Aerospatiale Matra, Daimler
Aerospace AG and Construcciones Aeronáuticas SA, leading to
the creation of EADS in 2000, was recorded using the purchasemethod of accounting with Aerospatiale Matra as the acquirer.
Accordingly, the book value of certain assets and liabilities,
mainly property, plant and equipment and inventories, wasadjusted by an aggregate amount of € 1.8 billion, net of income
taxes, to allocate a portion of the respective fair market valuesof Daimler Aerospace AG and Construcciones Aeronáuticas SA
at the time of the merger (the “fair value adjustments”). These
aggregate additions in value are generally being depreciatedover four to 25 years for ﬁxed assets and were amortisedover approximately 24 months for inventories. In addition, in
2001 in connection with the formation of Airbus S.A.S., EADS
adjusted the book value of Airbus ﬁxed assets and inventories
by an aggregate amount of € 0.3 billion, net of income taxes,
to reﬂect their fair market values. The fair value adjustments
lead to a depreciation expense that is recorded in cost of
sales in the consolidated income statement. For management
reporting purposes, EADS treats these depreciation charges
as non-recurring items in EBIT pre-goodwill impairment andexceptionals. See “— 2.1.3.2 Use of EBIT*”.

2.1.2.4 Impairment/Write-down of Assets
When a triggering event such as an adverse material market
event or a signiﬁcant change in forecasts or assumptions
occurs, EADS performs an impairment test on the assets, groupof assets, subsidiaries, joint ventures or associates likely to beaffected. In addition, EADS tests goodwill for impairment in the
fourth quarter of each ﬁnancial year, whether or not there is any
indication of impairment. An impairment loss is recognised in
the amount by which the asset’s carrying amount exceeds its
recoverable amount.
Generally, the discounted cash ﬂow method is used todetermine the value in use of the assets. The discounted
cash ﬂow method is particularly sensitive to the selecteddiscount rates and estimates of future cash ﬂows by EADS’management. Consequently, slight changes to these elements
can materially affect the resulting asset valuation and therefore
the amount of the potential impairment charge.

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The discount rates used by EADS are derived from theweighted average cost of capital of the businesses concerned.
See “Notes to the Consolidated Financial Statements(IFRS) — Note 2: Summary of signiﬁcant accounting policies —Signiﬁcant Accounting Policies — Impairment of non-ﬁnancial
assets” and “— Note 14: Intangible assets”.
An impairment of goodwill has an effect on proﬁtability, as
it is recorded in the line item “Other expenses” on EADS’
consolidated income statement. No goodwill was impaired in2009 or 2010. In 2011, the annual impairment test within Other
Businesses resulted in an impairment charge of € 20 million.

2.1.2.5 Capitalised Development Costs
Pursuant to the application of IAS 38 “Intangible Assets”, EADS
assesses whether product-related development costs qualify
for capitalisation as internally generated intangible assets.
Criteria for capitalisation are strictly applied. All research anddevelopment costs not meeting the IAS 38 criteria are expensed
as incurred in the consolidated income statement. € 53 million
of product-related development costs were capitalised inaccordance with IAS 38 in 2009, € 145 million in 2010 and€ 97 million in 2011, the latter relating mostly to the A330 MRTT
aerial refuelling boom system and FSTA programme at Airbus
Military, and to development in the military air systems andelectronics business segments at Cassidian.
Capitalised development costs are generally amortised overthe estimated number of units produced. If the number of units
produced cannot be estimated reliably, capitalised development
costs are amortised over the estimated useful life of theinternally generated intangible asset. Amortisation of capitalised
development costs (and impairments, if any) is mainly
recognised within “Cost of sales”. Amortisation of capitalised
development costs amounted to € -146 million in 2009,€ -34 million in 2010 and € -116 million in 2011, the latter relating
mostly to the Airbus A380 programme and FSTA programme.
Internally generated intangible assets are reviewed for
impairment annually when the asset is not yet in use andsubsequently whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable.
See “Notes to the Consolidated Financial Statements(IFRS) — Note 2: Summary of signiﬁcant accounting policies —Signiﬁcant accounting policies — Research and development
expenses”.

2.1.2.6 Accounting for Hedged Foreign
Exchange Transactions in the
Financial Statements
More than 60% of EADS’ revenues are denominatedin US dollars, whereas a substantial portion of its costs isincurred in euros and, to a lesser extent, pounds sterling. EADS
uses hedging strategies to manage and minimise the impact of
exchange rate ﬂuctuations on its proﬁts. See “— 2.1.7.1 Foreign
Exchange Rates” and “Risk Factors — 1. Financial Market Risks— Exposure to Foreign Currencies”.

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1Cash ﬂow hedges. The Group generally applies cash ﬂow
hedge accounting to foreign currency derivative contracts
that hedge the foreign currency risk on future sales as wellas to certain interest rate swaps that hedge the variability of
cash ﬂows attributable to recognised assets and liabilities.
Changes in fair value of the hedging instruments related to theeffective part of the hedge are reported in accumulated othercomprehensive income (“AOCI”) – a separate component of
total consolidated equity, net of applicable income taxes – andrecognised in the consolidated income statement in conjunction
with the result of the underlying hedged transaction, whenrealised. See “— 2.1.5 Changes in Consolidated Total Equity(including Non-controlling Interests)”. The ineffective portion isimmediately recorded in “Proﬁt (loss) for the period”. Amounts
accumulated in equity are recognised in proﬁt or loss in the
periods when the hedged transaction affects the income
statement, such as when the forecast sale occurs or when theﬁnance income or ﬁnance expense is recognised in the income
statement. If hedged transactions are cancelled, gains andlosses on the hedging instrument that were previously recordedin equity are generally recognised in “Proﬁt (loss) for the period”.
If the hedging instrument expires or is sold, terminated or
exercised, or if its designation as hedging instrument is revoked,
amounts previously recognised in equity remain in equity
until the forecasted transaction or ﬁrm commitment occurs.
Apart from derivative ﬁnancial instruments, the Group alsouses ﬁnancial liabilities denominated in a foreign currency tohedge foreign currency risk inherent in forecast transactions.
See “— 2.1.7.1 Foreign Exchange Rates”.
Revenues in currencies other than the euro that are not hedged
through ﬁnancial instruments are translated into euro at the spot
exchange rate at the date the underlying transaction occurs.
“Natural” hedges. EADS uses certain foreign currency
derivatives to mitigate its foreign currency exposure arising fromchanges in the fair value of recognised assets and liabilities.
To reﬂect the largely natural offset those derivatives provide to
the remeasurement gains or losses of speciﬁc foreign currency
balance sheet items, EADS presents the gains or losses of
those foreign exchange rate derivatives as well as the fair valuechanges of the relating recognised assets and liabilities in EBIT*(rather than presenting the gains or losses of those foreignexchange rate derivatives in “other ﬁnancial result” but the fairvalue changes of the relating recognised assets and liabilities in
EBIT*) insofar as certain formal requirements are met, with no
impact on net income. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 2: Summary of signiﬁcant accounting
policies — Signiﬁcant Accounting Policies — Derivative ﬁnancial
instruments” and “— Note 12: Total ﬁnance costs — Other
ﬁnancial result”.

2.1.2.7 Foreign Currency Translation
EADS’ Consolidated Financial Statements are presented
in euros. The assets and liabilities of foreign entities whose
reporting currency is other than euro are translated using
period-end exchange rates, while the corresponding income
statements are translated using average exchange rates during
the period. All resulting translation differences are included as acomponent of AOCI.
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Transactions in foreign currencies are translated into euro at theexchange rate prevailing on transaction date. Monetary assets
and liabilities denominated in foreign currencies at period-end
are translated into euro using the period-end exchange rate.
Foreign exchange gains and losses arising from translationof monetary assets are recorded in the consolidated income
statement, except when deferred in equity as qualifying hedging
instruments in cash ﬂow hedges.
Non-monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated
into euro at the exchange rate in effect on the date of thetransaction. Translation differences on non-monetary ﬁnancial
assets and liabilities that are measured at fair value are reported
as part of the fair value gain or loss. In addition, translationdifferences of non-monetary ﬁnancial assets measured at fairvalue and classiﬁed as available for sale are included in AOCI.
Goodwill and fair value adjustments arising on the acquisitionof a foreign entity that was acquired after 31 December 2004
are treated as assets and liabilities of the acquired company
and are translated into euro at the period-end exchange rate.
Regarding transactions prior to that date, goodwill, assets andliabilities acquired are treated as those of the acquirer.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 2: Summary of signiﬁcant accounting policies —Signiﬁcant accounting policies — Foreign currency translation”.

Currency Translation Mismatch
Customer advances (and the corresponding revenues
recorded when sales recognition occurs) are translated at
the exchange rate prevailing on the date they are received.
US dollar-denominated costs are converted at the exchange
rate prevailing on the date they are incurred. To the extent that
US dollar-denominated customer advances differ, in terms oftiming of receipt or amount, from corresponding US dollardenominated costs, there is a foreign currency exchange impact(mismatch) on EBIT*. Additionally, the magnitude of any suchdifference, and the corresponding impact on EBIT*, is sensitive
to variations in the number of deliveries.

2.1.2.8 Accounting for Sales Financing
Transactions in the Financial
Statements
In order to support product sales, primarily at Airbus,
Eurocopter and ATR, EADS may agree to participate in theﬁnancing of customers, on a case-by-case basis, directlyor through guarantees provided to third parties. Certain
sales contracts may include the provision of an asset value
guarantee, whereby EADS guarantees a portion of the market
value of an aircraft or helicopter during a limited period,
starting at a speciﬁc date after its delivery (in most cases,
12 years post-delivery). See “— 2.1.6.4 Sales Financing” and“Notes to the Consolidated Financial Statements (IFRS) —Note 33: Commitments and contingencies”. The accounting
treatment of sales ﬁnancing transactions varies based on thenature of the ﬁnancing transaction and the resulting exposure.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOPERATING AND FINANCIAL REVIEW

1On Balance Sheet. When, pursuant to a ﬁnancing transaction,
the risks and rewards of ownership of the ﬁnanced aircraft
reside with the customer, the transaction is characterised aseither a loan or a ﬁnance lease. In such instances, revenues
from the sale of the aircraft are recorded upon delivery, while
ﬁnancial interest is recorded over time as ﬁnancial income.
The outstanding balance of principal is recorded on thestatement of ﬁnancial position (on balance sheet) in longterm ﬁnancial assets, net of any accumulated impairments.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 17: Investments in associates accounted for under theequity method, other investments and other long-term ﬁnancial
assets”.
By contrast, when the risks and rewards of ownership
remain with the Group, the transaction is characterised as an
operating lease. EADS’ general policy is to avoid, wheneverpossible, operating leases for new aircraft to be delivered tocustomers. Rather than recording 100% of the revenues fromthe “sale” of the aircraft at the time of delivery, rental income
from such operating leases is recorded in revenues over theterm of the respective leases. The leased aircraft are recorded
at production cost on the statement of ﬁnancial position (onbalance sheet) as property, plant and equipment, and thecorresponding depreciation and potential impairment charges
are recorded in cost of sales. See “Notes to the Consolidated
Financial Statements (IFRS) — Note 15: Property, plant andequipment”.
If the present value of an asset value guarantee exceeds 10% of
the sales price of the aircraft, the sale of the underlying aircraft
is accounted for as an operating lease in the Consolidated
Financial Statements. In this case, upon aircraft delivery, thecash payment received from the customer is recognised on the
consolidated statement of ﬁnancial position as deferred income
and amortised straight-line up to the amount, and up to the last
exercise date, of the asset value guarantee. The production
cost of the aircraft is recorded on the statement of ﬁnancial
position as property, plant and equipment. Depreciation
expenses are recorded in cost of sales in the consolidated
income statement. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 15: Property, plant and equipment”
and “Note 30: Deferred income”.
Off Balance Sheet — Contingent Commitments. Certain
sales ﬁnancing commitments, such as lease in/lease out
structures and asset value guarantees the present value of
which is below the 10% threshold, are not recorded on thestatement of ﬁnancial position (on balance sheet).
As a result, transactions relating to such asset value guarantees
are accounted for as sales, with the related exposure deemed
to be a contingent commitment. To reduce exposure underasset value guarantees and to minimise the likelihood of theiroccurrence, the Group extends them with prudent guaranteedasset values and restrictive exercise conditions, including limited
exercise window periods.

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Under lease in/lease out structures, which Airbus and ATR
applied in the past to allow investors to take advantage of
certain jurisdictions’ leasing-related tax beneﬁts, the risks andrewards of ownership of the aircraft are typically borne by a third
party, usually referred to as the head lessor. The head lessor
leases (directly or indirectly) the aircraft to Airbus or ATR, which
in turn sub-leases it to the customer. To the extent possible, theterms of the head lease and sub-lease match payment streams
and other ﬁnancial conditions. Such commitments by Airbus
or ATR are reported as off-balance sheet contingent liabilities.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 33: Commitments and contingencies”.
Provisions and Allowances. Under its provisioning policy forsales ﬁnancing risk, EADS records provisions to fully cover its
estimated ﬁnancing and asset value net exposure. Provisions
pertaining to sales ﬁnancing exposure, whether on-balance
sheet or off-balance sheet, are recorded as impairments of
the related assets or in provisions. Provisions recorded asliabilities relate primarily to off-balance sheet commitments.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 25C: Other provisions”. Provisions are recorded as
impairments of the related assets when they can be directly
related to the corresponding asset. See “Notes to theConsolidated Financial Statements (IFRS) — Note 15: Property,
plant and equipment” and “— Note 17: Investments inassociates accounted for under the equity method, otherinvestments and other long-term ﬁnancial assets”. While
management views its estimates of valuations of collateral asconservative, changes in provisions reﬂecting revised estimates
may have a material impact on net income in future periods.

2.1.2.9 Provisions for Loss-Making Contracts
EADS records provisions for loss-making contracts when it
becomes probable that total contract costs will exceed total
contract revenues. Due to the size, length of time and natureof many of EADS’ contracts, the estimation of total revenues
and costs at completion is complicated and subject to many
assumptions, judgements and estimates. The introduction of
new aircraft programmes (such as the A350 XWB) or major
derivative aircraft programmes adds an additional element ofcomplexity to the assumptions, judgements and estimates
related to expected development, production and certiﬁcation
schedules and anticipated cost components, including possible
customer penalties and supplier claims. EADS’ contracts may
also include customer options to cancel or extend the contract
under certain circumstances, requiring a judgment as to theprobability that these options will be exercised.
Loss-making contract provisions are therefore reviewed
and reassessed regularly. However, future changes in theassumptions used by EADS or a change in the underlying
circumstances, such as the ﬂuctuation of certain foreignexchange rates, may lead to a revaluation of past loss-making
contract provisions and have a corresponding positive or
negative effect on EADS’ future ﬁnancial performance.

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2.1.3 Measurement of Management’s Performance
2.1.3.1 Order Backlog
Year-end order backlog consists of contracts signed up tothat date. Only ﬁrm orders are included in calculating orderbacklog – for commercial aircraft, a ﬁrm order is deﬁned as one
for which EADS receives a non-refundable down payment on
a deﬁnitive contract. Defence-related orders are included in thebacklog upon signature of the related procurement contract(and the receipt, in most cases, of an advance payment).
Commitments under defence “umbrella” or “framework”
agreements by governmental customers are not included inbacklog until they are ofﬁcially notiﬁed to EADS.

For civil market contracts, amounts of order backlog reﬂectedin the table below are derived from catalogue prices, escalated
to the expected delivery date and, to the extent applicable,
converted into euro (at the corresponding hedge rate for thehedged portion of expected cash ﬂows, and at the period-end
spot rate for the non-hedged portion of expected cash ﬂows).
The amount of defence-related order backlog is equal to thecontract values of the corresponding programmes.

Consolidated Backlog for the Years Ended 31 December 2011, 2010 and 2009 (1)Year ended 31 December 2011

Amount in €bn

495.5

92%

475.5

Amount in €bn

Airbus (3) (4)Airbus Commercial
Airbus MilitaryYear ended 31 December 2010

(2)

Year ended 31 December 2009
(2)

Amount in €bn

In percentage (2)

400.4

89%

339.7

87%

88%

378.9

85%

320.3

82%

In percentage

In percentage

21.3

4%

22.8

5%

20.7

5%

13.8

2%

14.5

3%

15.1

4%

Astrium

14.7

3%

15.8

4%

14.6

4%

Cassidian

15.5

3%

16.9

4%

18.8

5%

Total Divisional backlog

539.5

100%

447.6

100%

388.2

100%

Eurocopter

Other Businesses
HQ/Consolidation
Total
(1)
(2)
(3)
(4)

3.0

2.5

2.0

(1.5)

(1.6)

(1.1)

541.0

448.5

389.1

Without options.
Before “Other Businesses” and “HQ/Consolidation”.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.
See “— 2.1.1 Overview”.

2011 compared to 2010. The € 92.5 billion increase in theorder backlog from 2010, to € 541.0 billion, primarily reﬂects
the strong order intake at EADS in 2011 (€ 131.0 billion), whichlargely exceeded the revenues accounted for in the same year(€ 49.1 billion). In addition, the stronger US dollar spot rate used
for conversion of the non-hedged portion of the backlog into
euro at year end (€ -US$ 1.29 as compared to € -US$ 1.34 at
the end of 2010) had a positive impact on order backlog ofapproximately € 15 billion.
Airbus’ backlog increased by € 95.1 billion from 2010,
to € 495.5 billion, reﬂecting a strong increase at Airbus
Commercial. Airbus Commercial’s backlog increased by€ 96.6 billion from 2010, to € 475.5 billion, primarily reﬂecting
a book-to-bill ratio of more than three with new orders of€ 117.3 billion and, to a lesser extent, the positive net foreign
currency adjustment to the non-hedged portion of the orderbacklog. Order intake consisted of 1,419 net orders in 2011 (ascompared to 574 in 2010), driven mainly by the A320neo (newengine option), which received 1,226 ﬁrm orders. Total orderbacklog at Airbus Commercial amounted to 4,437 aircraft at the68 I EADS REGISTRATION DOCUMENT 2011end of 2011 (as compared to 3,552 aircraft at the end of 2010).
Airbus Military’s backlog decreased by € 1.5 billion from 2010,
to € 21.3 billion, reﬂecting a book-to-bill ratio of less than one
with new orders of € 0.9 billion. Order intake at Airbus Militaryconsisted of ﬁve net orders in 2011 (as compared to 11 in 2010).
Total order backlog at Airbus Military amounted to 217 aircraft at
the end of 2011 (as compared to 241 aircraft at the end of 2010).
Eurocopter’s backlog decreased by € 0.7 billion from 2010, to€ 13.8 billion, reﬂecting a book-to-bill ratio of less than one withnew orders of € 4.7 billion. Order intake consisted of 457 netorders in 2011 (as compared to 346 in 2010), driven mainly byorders for civil helicopters, in particular Ecureuil and the EC145.
Total order backlog amounted to 1,076 helicopters at the end of
2011 (as compared to 1,122 helicopters at the end of 2010).
Astrium’s backlog decreased by € 1.1 billion from 2010, to€ 14.7 billion, reﬂecting a book-to-bill ratio of less than one withnew orders of € 3.5 billion, driven mainly by commercial andinstitutional satellite orders.

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Cassidian’s backlog decreased by € 1.4 billion from 2010, to€ 15.5 billion, reﬂecting a book-to-bill ratio of less than one withnew orders of € 4.2 billion. Order intake included a contract
award for the ﬁrst phase of the United Arab Emirates commandand control system.
2010 compared to 2009. The € 59.4 billion increase in theorder backlog from 2009, to € 448.5 billion, primarily reﬂects
the strong order intake at EADS in 2010 (€ 83.1 billion), whichlargely exceeded the revenues accounted for in the same year(€ 45.8 billion). In addition, the stronger US dollar spot rateused for conversion of the non-hedged portion of the backlog
into euro at year end (€ -US$ 1.34 as compared to € -US$ 1.44
at the end of 2009) had a positive impact on order backlog ofapproximately € 25 billion.

Year ended 31 December 2011
Amount in €bn

In percentage

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Airbus Military consisted of 11 new net orders in 2010, including
21 orders for medium and light military aircraft, partially offset
by a reduction of ten ﬁrm orders for A400M aircraft by Germany
and the UK. Total order backlog at Airbus Military amounted to
241 aircraft at the end of 2010 (as compared to 250 aircraft at
the end of 2009).
Eurocopter’s backlog decreased by € 0.5 billion from 2009,to € 14.5 billion, reﬂecting a book-to-bill ratio of less than one
with new orders of € 4.3 billion. Order intake consisted of 346
net orders in 2010 (as compared to 344 in 2009), remaining
roughly stable in terms of units but decreasing in terms ofvalue compared to 2009. Total order backlog amounted
to 1,122 helicopters at the end of 2010 (as compared to
1,303 helicopters at the end of 2009).

Airbus’ backlog increased by € 60.7 billion from 2009, to€ 400.4 billion, primarily reﬂecting a strong increase at Airbus
Commercial. Airbus Commercial’s backlog increased by€ 58.6 billion from 2009, to € 378.9 billion, primarily reﬂecting
a book-to-bill ratio of more than one with new orders of€ 68.2 billion and, to a lesser extent, the positive net foreign
currency adjustment to the non-hedged portion of theorder backlog. Order intake consisted of 574 net orders in2010 (as compared to 271 in 2009). Total order backlog at
Airbus Commercial amounted to 3,552 aircraft at the endof 2010 (as compared to 3,488 aircraft at the end of 2009).
Airbus Military’s backlog increased by € 2.1 billion from 2009, to€ 22.8 billion, primarily reﬂecting the terms of the new agreement
reached among EADS/Airbus/AMSL, OCCAR and the launchnations with respect to the A400M programme. Order intake at(1)

2

Astrium’s backlog increased by € 1.1 billion from 2009, to€ 15.8 billion, reﬂecting a book-to-bill ratio of more than one
with new orders of € 6.0 billion. Order intake consisted primarilyof contracts with the French DGA for M51 evolution andmaintenance and two optical reconnaissance satellites, as well
as extension of the Skynet 5 contract with the UK MoD.
Cassidian’s backlog decreased by € 1.9 billion from 2009, to€ 16.9 billion, reﬂecting a book-to-bill ratio of less than one withnew orders of € 4.3 billion. Order intake included orders forEuroﬁghter integrated logistics support and captor radar, as wellas Team Complex Weapons in the UK.
The table below illustrates the proportion of civil and defence
backlog at the end of each of the past three years.

Year ended 31 December 2010
Amount in €bnYear ended 31 December 2009(1)

In percentage

Amount in €bn (1)In percentage

Backlog:
Civil Sector

488.2

90%

390.2

87%

331.8

85%

Defence Sector

52.8

10%

58.3

13%

57.3

15%

Total

541.0

100%

448.5

100%

389.1

100%

(1) Including “Other Businesses” and “HQ/Consolidation”.

2.1.3.2 Use of EBIT*EADS uses EBIT pre-goodwill impairment and exceptionals
as a key indicator of its economic performance. The term
“exceptionals” refers to such items as depreciation expenses offair value adjustments relating to the EADS merger, the Airbus
combination and the formation of MBDA, as well as impairment(in €m)Profit (loss) before finance costs and income taxes

charges thereon. It also comprises disposal and impairment
impacts related to goodwill in EADS.
Set forth below is a table reconciling EADS’ proﬁt (loss)
before ﬁnance costs and income taxes (as reﬂected in EADS’
consolidated income statement) with EADS’ EBIT*.

Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

1,613

1,187

(380)

Disposal and impairment of goodwill

42

-

-

Exceptional depreciation/disposal

41

44

58

1,696

1,231

(322)

EBIT*

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2.1.3.3 EBIT* Performance by Division
Set forth below is a breakdown of EADS’ consolidated EBIT* by Division for the past three years.
Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

584

305

(1,371)

Airbus Commercial

543

291

386

Airbus Military49

21(1,754)(in €m)Airbus (1)Eurocopter

259

183

263

Astrium

267

283

261

CassidianTotal Divisional EBIT*

331

457

449

1,441

1,228

(398)

Other Businesses

59

25

21

HQ/Consolidation (2)

196

(22)

52

1,696

1,231

(322)

Total

(1) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.
See “— 2.1.1 Overview”.
(2) HQ/Consolidation includes results from headquarters, which mainly consist of the “share of profit from associates accounted for under the equity method” from EADS’ investment
in Dassault Aviation.

2011 compared to 2010. EADS’ consolidated EBIT* increased
by 37.8%, from € 1.2 billion for 2010 to € 1.7 billion for 2011,
primarily reﬂecting the increased EBIT* at Airbus, Eurocopterand Headquarters/Consolidation. Partially offsetting thisincrease was a deterioration in EBIT* at Cassidian and Astrium
in 2011.
Airbus’ EBIT* increased by 91.5%, from € 0.3 billion for 2010
to € 0.6 billion for 2011, due primarily to an increase at Airbus
Commercial. Airbus Commercial’s EBIT* increased by 86.6%,
from € 0.3 billion for 2010 to € 0.5 billion for 2011, mainly due tooperational improvements, including higher aircraft deliveries(534 deliveries in 2011 with margin recognition for 536, ascompared to 510 deliveries in 2010 with margin recognition for508), positive mix effects and an improvement in the price ofdelivered aircraft net of escalation. See “— 2.1.4.1 Consolidated
Revenues”. Partially offsetting this EBIT* increase was anincrease in research and development expenses, particularly for
the A350 XWB programme, and a deterioration of hedge rates.
Airbus Military’s EBIT* increased from € 21 million for 2010 to€ 49 million for 2011, primarily due to a favourable delivery mix,
operational improvements and overhead cost reductions.
Eurocopter’s EBIT* increased by 41.5%, from € 183 million for2010 to € 259 million for 2011, primarily due to a favourable mix
effect in commercial deliveries and support activities as well as
better operational performance. An increase in research anddevelopment expenses was roughly offset by cost savings.
2011 EBIT* includes a net charge of € -115 million mainly relating
to governmental programmes and the “SHAPE” transformation
programme.
Astrium’s EBIT* decreased by 5.7%, from € 283 million for 2010
to € 267 million for 2011. The strong performance in the satellites
and space transportation businesses was weighed down
by lower activity in services, expenses related to the Vizada

70 I EADS REGISTRATION DOCUMENT 2011acquisition and a charge of € 23 million booked for the “AGILE”
transformation programme in 2011.
Cassidian’s EBIT* decreased by 27.6%, from € 457 million for2010 to € 331 million for 2011, primarily due to a signiﬁcant
increase in research and development expenses, a restructuringprovision of € 38 million in relation to its transformation
programme and a net negative charge of € 34 million on
programmes in 2011.
The EBIT* of Other Businesses increased from € 25 million for2010 to € 59 million for 2011, primarily due to increases at ATR
and Sogerma as well as a gain from the divestiture of Defense
Security and Systems Solutions (DS3) in EADS North America
that was completed in May 2011.
Headquarters/Consolidation EBIT* improved from € -22 million
for 2010 to € 196 million for 2011, mainly due to an increased
allocation of management fees to Divisions and positive impacts
from Group eliminations in the fourth quarter of 2011.
2010 compared to 2009. EADS’ consolidated EBIT* increased
from € -0.3 billion for 2009 to € 1.2 billion for 2010, primarily
reﬂecting the increased EBIT* at Airbus. Partially offsetting thisincrease was a deterioration in EBIT* at Eurocopter in 2010.
Airbus’ EBIT* increased from € -1.4 billion for 2009 to € 0.3 billion
for 2010, due to an increase at Airbus Military. Airbus
Commercial’s EBIT* decreased by 24.6%, from € 0.4 billion for2009 to € 0.3 billion for 2010, primarily due to an approximate€ -0.6 billion negative exchange rate effect compared to 2009.
This decrease in 2010 EBIT* at Airbus Commercial was partially
offset by (i) good underlying business performance, including
higher aircraft deliveries (510 deliveries in 2010 of which 508
qualiﬁed for margin recognition, as compared to 498 deliveriesin 2009) and a favourable mix effect and (ii) an improvementin the price of delivered aircraft net of escalation. In 2010, theA380 continued to weigh signiﬁcantly on Airbus Commercial’s
underlying performance.

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The approximate € -0.6 billion negative exchange rate effect at
Airbus Commercial compared to 2009 related to generally lessfavourable rates of hedges that matured in 2010 as compared
to 2009, which had a negative effect of € -0.9 billion, partially
offset by (x) the revaluation of loss-making contract provisions
which had a positive effect of € 0.1 billion on EBIT* compared
to 2009, and (y) other currency translation adjustments,
including those related to the mismatch between US dollardenominated customer advances and corresponding US dollardenominated costs, which had a positive effect of € 0.3 billion
on EBIT* compared to 2009. See “— 2.1.2.7 Foreign Currency
Translation”.
Airbus Military’s EBIT* increased from € -1,754 million for 2009to € 21 million for 2010, primarily due to a favourable delivery
mix and the A400M programme at zero margin compared to thecharge of € -1.8 billion recorded in 2009.
Eurocopter’s EBIT* decreased by 30.4%, from € 263 million
for 2009 to € 183 million for 2010, primarily due to (i) negative
effects of € -0.1 billion, driven mainly by charges for the NH90
and restructuring and (ii) higher research and development
expenses for innovation and product investment. The decreasein EBIT* was partially offset by a favourable mix effect.
Astrium’s EBIT* increased by 8.4%, from € 261 million for2009 to € 283 million for 2010, primarily due to growth andproductivity in defence and military services as well as
operational improvement in institutional activities.
Cassidian’s EBIT* increased by 1.8%, from € 449 million for2009 to € 457 million for 2010, primarily due to volume andmargin growth in mature programmes. Partially offsetting thisincrease was signiﬁcant growth in research and development
expenses in projects such as UAS and secure communications,as well as a net negative one-time effect of approximately€ -20 million reﬂecting among others the cancellation of theFirecontrol contract by the UK government.
The EBIT* of Other Businesses increased by 19.0%, from€ 21 million for 2009 to € 25 million for 2010, primarily due toincreases at ATR (including a positive foreign exchange effect of€ 15 million) and Sogerma. The increase was partially offset byhigher investment at EADS North America.

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Foreign Currency Impact on EBIT*. More than 60% of EADS’revenues are denominated in US dollars, whereas a substantial
portion of its costs is incurred in euros and, to a lesser extent,
pounds sterling. Given the long-term nature of its businesscycles (evidenced by its multi-year backlog), EADS hedges
a signiﬁcant portion of its net foreign exchange exposure to
mitigate the impact of exchange rate ﬂuctuations on its EBIT*.
See “— 2.1.7.1 Foreign Exchange Rates” and “Risk Factors –1. Financial Market Risks – Exposure to Foreign Currencies”.
In addition to the impact that Hedging Activities have on EADS’
EBIT*, the latter is also affected by the impact of revaluation ofcertain assets and liabilities at the closing rate and the impact ofnatural hedging.
During 2011, cash ﬂow hedges covering approximately
US$ 19.1 billion of EADS’ US dollar-denominated revenues
matured. In 2011, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted
for was € -US$ 1.37, as compared to € -US$ 1.35 in 2010.
This difference resulted in an approximate € -0.2 billion
decrease in EBIT* from 2010 to 2011, of which approximately€ -0.2 billion was at Airbus. In addition, other currencytranslation adjustments, including those related to the mismatch
between US dollar-denominated customer advances andcorresponding US dollar-denominated costs as well as therevaluation of loss-making contract provisions, had a positiveeffect of € 0.2 billion on EBIT* compared to 2010. See “— 2.1.2.7
Foreign Currency Translation”.
During 2010, cash ﬂow hedges covering approximately
US$ 18.5 billion of EADS’ US dollar-denominated revenues
matured. In 2010, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted
for was € -US$ 1.35, as compared to € -US$ 1.26 in 2009.
This difference resulted in an approximate € -1.0 billion decreasein EBIT* from 2009 to 2010, of which approximately € -0.9 billion
was at Airbus. In addition, other currency translation
adjustments, including those related to the mismatch between
US dollar-denominated customer advances and corresponding
US dollar-denominated costs as well as the revaluation of lossmaking contract provisions, had a positive effect of € 0.4 billion
on EBIT* compared to 2009.

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2.1.4 Results of Operations
Set forth below is a summary of EADS’ consolidated income statements (IFRS) for the past three years.
(in €m, except for earnings (losses) per share)

Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

Revenues

49,12845,752

42,822

Cost of sales(42,285)(39,528)(38,383)

Gross margin

6,843

6,224

4,439

Selling and administrative expenses(2,408)(2,312)(2,196)

Research and development expenses(3,152)(2,939)(2,825)

Other income

359

171

170

Other expenses

(221)

(102)

(102)

Share of profit from associates accounted for under the equity
method and other income from investments

192

145

134

1,613

1,187

(380)

13

(99)

(147)

(233)

(272)

(445)

Income taxes

(356)

(244)

220

Profit (loss) for the period

1,037

572

(752)

1,033

553

(763)

Profit (loss) before finance costs and income taxes
Interest result
Other financial result

Attributable to:Equity owners of the parent (Net Income (loss))
Non-controlling interests

4

19

11

Earnings (losses) per share (basic)(in €)

1.27

0.68

(0.94)

Earnings (losses) per share (diluted)(in €)

1.27

0.68

(0.94)

Set forth below are year-to-year comparisons of results of operations, based upon EADS’ consolidated income statements.

2.1.4.1 Consolidated Revenues
Set forth below is a breakdown of EADS’ consolidated revenues by Division for the past three years.
Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 200933,10329,97828,067

Airbus Commercial

31,15927,673

26,370Airbus Military

2,504

2,684

2,235

(in €m)Airbus (1)Eurocopter

5,415

4,830

4,570

Astrium

4,964

5,003

4,799

Cassidian

5,803

5,933

5,363

Total Divisional revenues

49,28545,74442,799

1,252

1,182

1,096

Other Businesses
HQ/Consolidation

(2)

Total

(1,409)(1,174)(1,073)49,12845,752

42,822(1) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus Division level.
See “— 2.1.1 Overview”.
(2) HQ/Consolidation includes, in particular, adjustments and eliminations for intercompany transactions.

For 2011, consolidated revenues increased by 7.4%, from € 45.8 billion for 2010 to € 49.1 billion for 2011. The increase was primarily
due to higher revenues at Airbus and Eurocopter, partially offset by slight revenue decreases at Astrium and Cassidian.
For 2010, consolidated revenues increased by 6.8%, from € 42.8 billion for 2009 to € 45.8 billion for 2010. The increase was due tohigher revenues across all Divisions.

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AirbusFor 2011, Airbus’ consolidated revenues increased by 10.4%, from € 30.0 billion for 2010 to € 33.1 billion for 2011. The increase wasdue to higher revenues at Airbus Commercial, partially offset by a decrease in revenues at Airbus Military.
For 2010, Airbus’ consolidated revenues increased by 6.8%, from € 28.1 billion for 2009 to € 30.0 billion for 2010. The increase wasprimarily due to higher revenues at Airbus Commercial, as well as a small increase in revenues at Airbus Military.

Airbus Commercial
Set forth below is a breakdown of deliveries of commercial aircraft by product type for the past three years.
Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

421

401

402

Long-range

87

91

86

Very large

26

18

10

(1)

(2)

498

Number of aircraft

Single-aisle

Total

534

510

(1) 536 aircraft with revenue recognition (two A330-200 delivered under operating lease in 2010 were sold down in 2011).
(2) 508 aircraft with revenue recognition (two A330-200 delivered under operating lease).

For 2011, Airbus Commercial’s consolidated revenues increasedby 12.6%, from € 27.7 billion for 2010 to € 31.2 billion for 2011.
The increase was primarily due to higher aircraft deliveries(534 deliveries in 2011 with revenue recognition for 536, ascompared to 510 deliveries in 2010 with revenue recognition for508), a favourable mix effect (in particular the increased numberof A380s delivered in 2011) as well as an improvement in theprice of delivered aircraft net of escalation. Partially offsetting
this revenue increase was an approximate € -0.4 billion negative
impact of exchange rate effects. For a discussion of the impact
of exchange rate variations on EADS’ results of operations,see “— 2.1.2.6 Accounting for Hedged Foreign Exchange
Transactions in the Financial Statements”,“— 2.1.2.7 Foreign

2

Currency Translation”,“— 2.1.7.1 — Foreign Exchange Rates”
and “Risk Factors — 1. Financial Market Risks — Exposure to
Foreign Currencies”.
For 2010, Airbus Commercial’s consolidated revenues
increased by 4.9%, from € 26.4 billion for 2009 to € 27.7 billion
for 2010. The increase was primarily due to higher aircraft
deliveries (510 deliveries in 2010 of which 508 qualiﬁed forrevenue recognition, as compared to 498 in 2009), a favourable
mix effect (in particular the increased number of A380s
delivered in 2010) as well as an improvement in the price ofdelivered aircraft net of escalation. Partially offsetting thisrevenue increase was an approximate € -0.5 billion negative
impact of exchange rate effects.

Airbus Military
Set forth below is a breakdown of deliveries of military transport aircraft by product type for the past three years.
Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

CN235

7

6

4

C212

3

-

-

Number of aircraft

C295

10

13

12

P-3

3

1

-

A330 MRTT (Tanker)

6

-

-

Total

29

20

16

For 2011, Airbus Military’s consolidated revenues decreased
by 6.7%, from € 2.7 billion for 2010 to € 2.5 billion for 2011.
The decrease was primarily due to € 0.3 billion lower revenue
recognition on the A400M programme in 2011, partially offset by
an increase in revenues from tanker activities.

For 2010, Airbus Military’s consolidated revenues increased by
20.0%, from € 2.2 billion for 2009 to € 2.7 billion for 2010. The
increase was primarily due to € 0.5 billion in higher revenue
recognition on the A400M programme in 2010, partially offset
by a decrease in revenues from tanker and medium and lightaircraft activities.

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Eurocopter
Set forth below is a breakdown of deliveries of helicopters by product type for the past three years.
Number of aircraftYear ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

Tiger

16

15

7

Light

237

260

284

Medium

189

197

219

Heavy

61

55

48

of which NH90

32

28

15

Total

503

527

558

For 2011, consolidated revenues of Eurocopter increased by
12.1%, from € 4.8 billion for 2010 to € 5.4 billion for 2011, despite
an overall decrease in helicopter deliveries from 527 in 2010
to 503 in 2011. The revenue increase was primarily due to afavourable mix effect in commercial deliveries and from support
activities, as well as additional revenues of € 0.2 billion in 2011
related to the ﬁrst-time consolidation of Vector Aerospace. See“— 2.1.2.1 Scope of and Changes in Consolidation Perimeter”.

For 2010, consolidated revenues of Eurocopter increased by
5.7%, from € 4.6 billion for 2009 to € 4.8 billion for 2010, despite
an overall decrease in helicopter deliveries from 558 in 2009
to 527 in 2010. The revenue increase was primarily due to afavourable mix effect (in particular the higher number of NH90
and Tiger helicopters delivered in 2010) and growth in support
revenues.

Astrium
Set forth below is a breakdown of deliveries of telecommunications satellites for the past three years.

Telecommunication Satellites

For 2011, consolidated revenues of Astrium amounted to€ 5.0 billion, almost stable compared to 2010. A decrease inrevenues at Astrium Services was nearly offset by an increase
in revenues at Astrium Space Transportation and Astrium
Satellites.
For 2010, consolidated revenues of Astrium increased by 4.3%,
from € 4.8 billion for 2009 to € 5.0 billion for 2010. The increase
was due to strong deliveries in telecommunication and earth
observation satellites and growth in defence revenues, whichmore than offset the catch-up effect for in-orbit incentive
schemes booked in 2009 (€ -0.2 billion).

Cassidian
For 2011, consolidated revenues of Cassidian decreased by
2.2%, from € 5.9 billion for 2010 to € 5.8 billion for 2011. Strong
revenues related to backlog deliveries from core and export
Euroﬁghter programme, missiles and radar business were morethan offset by, among other things, the milestone shift in the
security business.
For 2010, consolidated revenues of Cassidian increased by
10.6%, from € 5.4 billion for 2009 to € 5.9 billion for 2010.
The increase primarily reﬂects volume growth in core and export
markets for Euroﬁghter and missile programmes as well as
progress in border security contracts.

74 I EADS REGISTRATION DOCUMENT 2011

Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

5

5

4

Other Businesses
For 2011, consolidated revenues of Other Businesses increased
by 5.9%, from € 1.2 billion for 2010 to € 1.3 billion for 2011.
The increase mainly reﬂects a ramp-up in medium and lighttransport aircraft deliveries and higher revenues from light utility
helicopter deliveries at EADS North America in 2011, as wellas production rate increases and higher cabin seat activity at
EADS Sogerma.
For 2010, consolidated revenues of Other Businesses increasedby 7.8%, from € 1.1 billion for 2009 to € 1.2 billion for 2010.
The increase mainly reﬂects the ramp-up in light utility helicopter
deliveries at EADS North America (53 in 2010 compared to 45
in 2009).

2.1.4.2 Consolidated Cost of Sales
For 2011, consolidated cost of sales increased by 7.0% despite
certain cost savings, from € 39.5 billion for 2010 to € 42.3 billion
for 2011. The increase was primarily due to strong delivery
patterns and costs related to business growth at Airbus,
as well as a loss-making contract charge of € 200 million
incurred on the A350 XWB programme in 2011. See “— 2.1.1.3
Signiﬁcant Programme Developments in 2009, 2010 and 2011”.
Consolidated cost of sales also includes the amortisationof capitalised development costs pursuant to IAS 38, whichamounted to € -116 million in 2011 compared to € -34 million in2010. Mainly as a result of the above stated items and despite

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a negative US dollar effect at Airbus in respect of revenues
compared to 2010, the gross margin increased from 13.6% in2010 to 13.9% in 2011.
For 2010, consolidated cost of sales increased by 3.0%, from€ 38.4 billion for 2009 to € 39.5 billion for 2010. The increase
was primarily due to strong delivery patterns, cost escalationand costs related to business growth at Airbus, which werepartially offset by additional Power8 savings in 2010 and theabsence of loss-making contract charges incurred on the
A400M and the A380 programmes in 2009 (€ -2.1 billion).
See “— 2.1.1.3 Signiﬁcant Programme Developments in 2009,2010 and 2011”. Consolidated cost of sales also includes theamortisation of capitalised development costs pursuant to
IAS 38, which amounted to € -34 million in 2010 compared to€ -146 million in 2009. Mainly as a result of the above stateditems and despite a negative US dollar effect at Airbus inrespect of revenues compared to 2009, the gross marginincreased from 10.4% in 2009 to 13.6% in 2010.

2.1.4.3 Consolidated Sellingand Administrative Expenses
For 2011, consolidated selling and administrative expenses
increased by 4.2%, from € 2.3 billion for 2010 to € 2.4 billion
for 2011. The increase was primarily due to higher expenses
at Eurocopter, which was in turn primarily related to the ﬁrst
consolidation of Vector Aerospace. See “— 2.1.2.1 Scope of andChanges in Consolidation Perimeter”.
For 2010, consolidated selling and administrative expenses
increased by 5.3%, from € 2.2 billion for 2009 to € 2.3 billion
for 2010. The increase was primarily due to higher expenses atAirbus and Astrium in connection with bid campaigns.

2.1.4.4 Consolidated Researchand Development Expenses
For 2011, consolidated research and development expenses
increased by 7.2%, from € 2.9 billion for 2010 to € 3.2 billion for2011. The increase was primarily due to higher expenses atAirbus for A350 XWB development, at Cassidian for unmanned
aerial systems and Euroﬁghter radar activities and at Eurocopter
across the product range. See “— 2.1.2.5 Capitalised
development costs”.
For 2010, consolidated research and development expenses
increased by 4.0%, from € 2.8 billion for 2009 to € 2.9 billion
for 2010. The increase was primarily due to higher expenses
at Cassidian for the unmanned aerial systems and systems
businesses and at Eurocopter across the product range.
At Airbus, the increase in A350 XWB-related expenses wasroughly offset by decreases in other programmes, in particular
the A380 and the A330-200F.

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For 2011, the net of other income and other expenses was€ 138 million as compared to € 69 million for 2010. The netincrease was mainly due to the settlement of European
government refundable advances following Airbus’ terminationof the A340 programme in 2011, which had a positive effect of€ 192 million on other income. See “Notes to the Consolidated
Financial Statements (IFRS) — Note 27: Other ﬁnancial
liabilities”. This positive effect was partially offset by a goodwill
impairment charge of € -20 million in 2011.
For 2010, the net of other income and other expenses was€ 69 million as compared to € 68 million for 2009. Gains andlosses roughly offset each other compared to 2009.

2.1.4.6 Consolidated Share of Profit
from Associates Accounted for under
the Equity Method and Other Income
from Investments
Consolidated share of proﬁt from associates accounted forunder the equity method and other income from investments
principally includes results from companies accounted forunder the equity method and the results attributable tonon-consolidated investments.
For 2011, EADS recorded € 192 million in consolidated shareof proﬁt from associates accounted for under the equity
method and other income from investments as compared to€ 145 million for 2010. The € 47 million increase reﬂects among
others the increased contribution from EADS’ equity investment
in Dassault Aviation. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 11: Share of proﬁt from associates
accounted for under the equity method and other income frominvestments”.
For 2010, EADS recorded € 145 million in consolidated shareof proﬁt from associates accounted for under the equity
method and other income from investments as compared to€ 134 million for 2009. The € 11 million increase primarily reﬂects
the increased contribution from EADS’ equity investment in
Dassault Aviation.

2.1.4.7 Consolidated Interest Result
Consolidated interest result reﬂects the net of interest income
and expense arising from ﬁnancial assets and liabilities,
including interest expense on refundable advances provided by
European governments to ﬁnance R&D activities.

2.1.4.5 Consolidated Other Income
and Other Expenses

For 2011, EADS recorded a consolidated net interest income of€ 13 million, as compared to a consolidated net interest expenseof € -99 million for 2010. The improvement in interest result is
primarily due to lower interest expenses on refundable advances
and a higher interest income recorded on the Group’s higher
cash balances. The 2011 interest result includes a positiveeffect of € 120 million following Airbus’ termination of the A340
programme in 2011. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 27: Other ﬁnancial liabilities”.

Consolidated other income and other expenses include gains
and losses on disposals of investments in ﬁxed assets andincome from rental properties.

For 2010, EADS recorded a consolidated net interest expenseof € -99 million, as compared to a consolidated net interest
expense of € -147 million for 2009. The improvement is due

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liabilities and to the reassessment of future cash outﬂows ofEuropean government refundable advances.

2.1.4.8 Consolidated Other Financial Result
This line item includes, among others, the impact from therevaluation of ﬁnancial instruments, the effect of foreignexchange valuation of monetary items and the unwinding of
discounted provisions. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 2: Summary of signiﬁcant accounting
policies — Signiﬁcant Accounting Policies — Derivative ﬁnancial
instruments — Embedded derivatives”. This line item also
includes the valuation of the premium paid for US dollar options
used for foreign exchange hedging.
For 2011, consolidated other ﬁnancial result improved to€ -233 million from € -272 million for 2010. This positive€ 39 million change results among others from the improvementin the impact of revaluation changes of US dollar- and poundsterling-denominated cash balances on the euro-denominatedbalance sheets of Group companies. See “Notes to theConsolidated Financial Statements (IFRS) — Note 12: Total
ﬁnance costs” for further discussion.
For 2010, consolidated other ﬁnancial result improved to€ -272 million from € -445 million for 2009. This positive€ 173 million change results primarily from the lower unwindingof discounts in 2010 compared to 2009, due in turn to the lower
discounted provisions outstanding.

2.1.4.9 Consolidated Income Taxes
For 2011, income tax expense was € -356 million as comparedto € -244 million for 2010. The increase was primarily due tothe higher taxable income recorded in 2011 (€ 1,393 million) as
compared to 2010 (€ 816 million). The effective tax rate was 26%
in 2011. The decrease of the tax rate reﬂects, among others,
a positive impact from the reassessment of tax provisions.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 13: Income taxes”.

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For 2010, income taxes yielded a € -244 million expense,
compared to a € 220 million beneﬁt in 2009. The expense wasdue to the taxable income of € 816 million recorded in 2010,
as compared to a taxable loss of € -972 million recorded in theprevious year. The effective tax rate was 30% in 2010.

2.1.4.10 Consolidated Non-Controlling
Interests
For 2011, consolidated proﬁt for the period attributable to noncontrolling interests was € 4 million, as compared to € 19 million
for 2010 and € 11 million for 2009.

2.1.4.11 Consolidated Profit (Loss) for
the Period Attributable to Equity
Owners of the Parent (Net Income(Loss))As a result of the factors discussed above, EADS recorded
consolidated net income of € 1,033 million for 2011, as
compared to consolidated net income of € 553 million for 2010
and a consolidated net loss of € -763 million for 2009.

2.1.4.12 Earnings per Share
Basic earnings were € 1.27 per share in 2011, as compared to€ 0.68 per share in 2010. The number of outstanding shares
as of 31 December 2011 was 814,896,511. The denominator
used to calculate earnings per share was 812,507,288 shares,
reﬂecting the weighted average number of shares outstanding
during the year. In 2009, EADS reported a basic loss of € -0.94
per share.
Diluted earnings were € 1.27 per share in 2011, as comparedto € 0.68 per share in 2010. The denominator used to calculate
diluted earnings per share was 813,701,912, reﬂecting theweighted average number of shares outstanding during theyear, adjusted to assume the conversion of all potential ordinary
shares. In 2009, EADS reported a diluted loss of € -0.94 pershare.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 23: Total equity” and “— Note 38: Earnings per share”.

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2.1.5 Changes in Consolidated Total Equity(Including Non-Controlling Interests)
The following table sets forth a summary of the changes in consolidated total equity for the period 1 January 2011 through31 December 2011.
(in €m)Balance as of 31 December 2010

8,936

Profit for the period

1,037

Actuarial gains and losses(579)

Accumulated other comprehensive income(289)

Thereof currency translation adjustments(72)

Capital increase

63

Share-based payment (IFRS 2)

15

Cash distribution to EADS NV shareholders/dividends paid to non-controlling interests(183)

Equity transaction (IAS 27)(125)

Change in non-controlling interests
Change in treasury shares
Balance as of 31 December 2011

The consolidated total equity in 2011 primarily reﬂects changes
in actuarial gains and losses (€ -0.6 billion) and the decreasein accumulated other comprehensive income (“AOCI”)(€ -0.3 billion), with the latter mainly due to the negative variation(net of tax) of the year-end mark-to-market valuation of that
portion of EADS’ hedge portfolio qualifying for cash ﬂow
hedge accounting under IAS 39 (“cash ﬂow hedges”). These
decreases in consolidated total equity were partially offset by
the proﬁt for the period recorded for 2011.
Set forth below is a discussion on the calculation of AOCI
and the related impact on consolidated total equity. For a
discussion of the other line items affecting consolidated total
equity, see “Consolidated Financial Statements (IFRS) of EADS
— Consolidated Statements of Changes in Equity (IFRS) for theyears ended 31 December 2011, 2010 and 2009”.

2.1.5.1 Cash Flow Hedge Related Impact
on AOCI
As of 31 December 2011, the notional amount of EADS’
portfolio of outstanding cash ﬂow hedges amounted to
US$ 75.1 billion, hedged against the euro and the pound

3
(8)
8,870

sterling. The year-end mark-to-market valuation of this portfolio
required under IAS 39 resulted in a negative pre-tax AOCI
valuation change of € -0.5 billion from 31 December 2010,
based on a closing rate of € -US$ 1.29, as compared to anegative pre-tax AOCI valuation change of € -3.2 billion asof 31 December 2010 from 31 December 2009, based ona closing rate of € -US$ 1.34. For further information on themeasurement of the fair values of ﬁnancial instruments see“Notes to the Consolidated Financial Statements (IFRS) —Note 34: Information about ﬁnancial instruments”.
Positive pre-tax mark-to-market values of cash ﬂow hedges
are included in other ﬁnancial assets, while negative pre-tax
mark-to-market values of cash ﬂow hedges are included in otherﬁnancial liabilities. Year-to-year changes in the mark-to-market
value of cash ﬂow hedges are recognised as adjustments to
AOCI. These adjustments to AOCI are net of corresponding
changes to deferred tax assets (for cash ﬂow hedges withnegative mark-to-market valuations) and deferred tax liabilities(for cash ﬂow hedges with positive mark-to-market valuations).
Set out below is a graphic presentation of cash ﬂow hedge
related movements in AOCI over the past three years (in €m).

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Cash Flow Hedge Related Movements in AOCI in €m (based on year-end exchange rates)

1,191

OCI Net Liability-2,001-2,547-361

Net Deferred Taxes

629
776
830

Net Equity OCI-1,37231 December 2009: US$-1.44
31 December 2010: US$-1.34
31 December 2011: US$-1.29-1,771

As a result of the negative change in the fair market valuation of
the cash ﬂow hedge portfolio in 2011, AOCI amounted to a net
liability of € -2.5 billion for 2011, as compared to a net liability of€ -2.0 billion for 2010. The corresponding € 0.2 billion tax effectled to a net deferred tax asset of € 0.8 billion as of 31 December
2011 as compared to a net deferred tax asset of € 0.6 billion asof 31 December 2010.

See “Notes to the Consolidated Financial Statements (IFRS)— Note 34B: Carrying amounts and fair values of ﬁnancial
instruments” for further information.

2.1.5.2 Currency Translation Adjustment
Impact on AOCIThe € -72 million currency translation adjustment (“CTA”) related
impact on AOCI in 2011 mainly reﬂects the effect of the variationof the US dollar.

2.1.6 Liquidity and Capital Resources
The Group’s objective is to maintain sufﬁcient cash and cash
equivalents at all times to meet its present and future cash
requirements and maintain a favourable credit rating. It attempts
to achieve this objective by:programme and commercial paper programme. See “— 2.1.6.3
Consolidated Financing Liabilities”. The factors affecting EADS’cash position, and consequently its liquidity risk, are discussed
below.

O implementing measures designed to generate cash;

EADS has a long-term credit rating of A1 with a stable outlook
by Moody’s Investors Service Inc. (“Moody’s”), A- with apositive outlook by Standard and Poor’s Credit Market Services
Europe Limited (“Standard & Poor’s”) and BBB+ with a stable
outlook by Fitch Polska S.A. (“Fitch Ratings”). Standard andPoor’s and Fitch Ratings are established in the European Union
and, as of the date of this Registration Document, are registeredas credit rating agencies in accordance with EC Regulation
1060/2009 of the European Parliament and of the Councilof 16 September 2009 on credit rating agencies (the “CRA
Regulation”). Moody’s is not established in the European Unionand not registered under the CRA Regulation but Moody’s
Investors Service Ltd., its European Union credit rating agency
afﬁliate, is registered under the CRA Regulation and has
endorsed Moody’s rating.

O developing and maintaining access to the capital markets;
andO containing its exposure to customer financing.
EADS beneﬁts from a strong positive cash position, with€ 16.8 billion of consolidated gross cash (including securitiesof € 11.5 billion) as of 31 December 2011. EADS deﬁnes its
consolidated net cash position as the difference between(i) cash and cash equivalents, (ii) securities less (iii) ﬁnancing
liabilities (as recorded in the consolidated statement of ﬁnancial
position). The net cash position as of 31 December 2011 was€ 11.7 billion (€ 11.9 billion as of 31 December 2010).
This cash position is further supported by a € 3.0 billion
syndicated back-up facility, undrawn as of 31 December 2011
with no ﬁnancial covenants, as well as a Euro medium term note

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2.1.6.1 Cash FlowsEADS generally ﬁnances its manufacturing activities and product development programmes, and in particular the developmentof new commercial aircraft, through a combination of ﬂows generated by operating activities, customer advances, risk-sharing
partnerships with sub-contractors and European government refundable advances. In addition, EADS’ military activities beneﬁt fromgovernment-ﬁnanced research and development contracts. If necessary, EADS may raise funds in the capital markets.
The following table sets forth the variation of EADS’ consolidated net cash position over the periods indicated.
(in €m)Consolidated net cash position at 1 January
Gross cash flow from operations(1)

Changes in other operating assets and liabilities
Thereof customer financing

Year ended
31 December 2011

Year ended
31 December 2010

Year ended
31 December 2009

11,918

9,797

9,193

3,392

2,177

2,423

1,386

2,819

15

135

63

(406)

(3,820)(2,289)(1,853)

Thereof industrial capital expenditures(2,197)(2,250)(1,957)

Thereof acquisitions(1,535)

(38)

(21)

Cash used for investing activities (2)

(3)

958

2,707

585

Thereof free cash flow before customer financing

823

2,644

991

Cash distribution to shareholders/non-controlling interests

(183)

(7)

(166)

Changes in capital and non-controlling interests

(65)

(48)

17

Change in treasury shares

(1)

(3)

(5)

Contribution to plan assets of pension schemes

(489)

(553)

(173)

Other changes in financial position

(457)

25

346

11,681

11,918

9,797

Free cash flow

Consolidated net cash position as of 31 December(1) Represents gross cash flow from operations, excluding (i) variations in working capital and (ii) contribution to plan assets of pension schemes (€(173) million for 2009; €(553) million
for 2010; €(489) million for 2011).
(2) Does not reflect investments in available-for-sale securities (net addition of €(821) million for 2009; net addition of €(3,147) million for 2010; net addition of €(378) million for 2011),
which are classified as cash and not as investments solely for the purposes of this net cash presentation.
(3) Does not reflect investments in available-for-sale securities or contribution to plan assets of pension schemes.

The net cash position as of 31 December 2011 was€ 11.7 billion, a 2.0% decrease from 31 December 2010.
The decrease primarily reﬂects the cash used for investing
activities (€ -3.8 billion) in particular related to acquisitions in
2011, partially offset by the gross cash ﬂow from operations(€ 3.4 billion) as well as other items.

Gross Cash Flow from Operations
Gross cash ﬂow from operations increased by 55.8% to€ 3.4 billion for 2011, primarily due to the improvement of
proﬁtability before depreciation and provisioning.

Changes in Other Operating Assets
and Liabilities
Changes in other operating assets and liabilities is comprised ofinventory, trade receivables, other assets and prepaid expenses
netted against trade liabilities, other liabilities (including
customer advances), deferred income and customer ﬁnancing.
Changes in working capital resulted in a € 1.4 billion positive
impact on the net cash position for 2011, as compared to a
positive impact of € 2.8 billion for 2010.
In 2011, the main net contributors to the positive working
capital variation were: (i) pre-delivery payments from customers(€ 2.0 billion), which increased compared to 2010 due to higher
business activity mainly at Airbus, (ii) the change in tradeliabilities (€ 0.8 billion), mainly at Airbus and (iii) the change intrade receivables (€ 0.4 billion). The positive variations within
the year were partially offset by (i) the change in inventory(€ -1.6 billion) reﬂecting inventory growth across most Divisions,in particular at Airbus due to the progressive ramp-up on singleaisle and long-range aircraft production and (ii) the change inother assets and liabilities (€ -0.3 billion).
In 2010, the main net contributors to the positive working capitalvariation were: (i) the change in inventory (€ 0.7 billion), reﬂecting
inventory reduction at Airbus in particular and (ii) pre-delivery
payments from customers (€ 1.7 billion), which were higher at
Airbus Commercial during 2010 but nonetheless decreased
overall compared to 2009 as a result of lower advancepayments at Astrium and Cassidian following the exceptional
order intake booked in 2009, and (iii) the change in other assets
and liabilities (€ 0.7 billion), including government receipts fordevelopment programmes. The positive variations within theyear were partially offset by the change in trade receivables(€ -0.3 billion).
European Government Refundable Advances. As of
31 December 2011, total European government refundable
advances received, recorded on the statement of ﬁnancial
position in the line items “non-current other ﬁnancial liabilities”
and “current other ﬁnancial liabilities” due to their speciﬁcnature, amounted to € 5.7 billion, including accrued interest.

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1European government refundable advances (net ofreimbursements) as recorded on the statement of ﬁnancial
position decreased in 2011, due primarily to the settlementof € 0.4 billion in obligations following Airbus’ termination of
the A340 programme (cash effect of € -0.1 billion). This also
had a positive effect on other income and on interest result(€ 192 million and € 120 million, respectively) during 2011 as(in €bn)

Long-range

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discussed above. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 27: Other ﬁnancial liabilities”.
Set out below is a breakdown of the total amount of European
government refundable advances outstanding, by product/
project.

2011

2010

2009

1.5

1.8

1.2

A380

3.8

3.7

3.6

Eurocopter

0.2

0.2

0.2

Others

0.2

0.3

0.3

Total

5.7

6.0

5.3

Cash Used for Investing Activities
Management categorises cash used for investing activities
into three components: (i) industrial capital expenditures,(ii) acquisitions and (iii) others.
Industrial Capital Expenditures. Industrial capital
expenditures (investments in property, plant and equipment
and intangible assets) amounted to € -2.2 billion for 2011, as
compared to € -2.3 billion for 2010 and € -2.0 billion for 2009.
Capital expenditures in 2011 related to programmes at Airbus of€ -1.4 billion (a large portion of which related to the A350 XWB)
and additional projects in the other Divisions of € -0.8 billion,
mainly driven by investment at Astrium.
For the period 2012 to 2013, it is expected that the majority of
EADS’ capital expenditures will occur in connection with Airbus
activities – in particular, for the A350 XWB programme – andbe broadly distributed across EADS’ home markets of France,
Germany, Spain and the UK.
Acquisitions. In 2011, the € -1.5 billion ﬁgure reﬂects the net
cash used for the Group’s acquisitions during the year, inparticular Vizada (€ -709 million), Vector (€ -432 million) andSatair (€ -342 million). See “Notes to the Consolidated Financial
Statements (IFRS) — Note 31: Consolidated statement of cash
ﬂows”.
In 2010, the € -38 million ﬁgure reﬂects the acquisition of
Jena-Optronik GmbH. In 2009, the € -21 million ﬁgure primarily
reﬂects the acquisition of the underwater systems business of
QinetiQ.

Free Cash Flow
As a result of the factors discussed above, free cash ﬂow
amounted to € 1.0 billion for 2011, as compared to € 2.7 billion
for 2010 and € 0.6 billion for 2009. Free cash ﬂow before
customer ﬁnancing was € 0.8 billion for 2011, as compared to€ 2.6 billion for 2010 and € 1.0 billion for 2009.

Contribution to Plan Assets of Pension Schemes
The cash outﬂows of € -0.5 billion and € -0.6 billion in 2011
and 2010, respectively, primarily relate to a contribution to
the Contractual Trust Arrangement (CTA) for allocating and

80 I EADS REGISTRATION DOCUMENT 2011

generating pension plan assets in accordance with IAS 19, as
well as to plan assets in the UK and to German beneﬁt funds.
The cash outﬂow of € -0.2 billion in 2009 primarily relates to acontribution to plan assets in the UK and to German beneﬁt
funds. See “Notes to the Consolidated Financial Statements(IFRS) — Note 25B: Provisions for retirement plans”. In 2012,
EADS intends to make additional contributions to plan assets
in order to reduce the provision for retirement plans on its
statement of ﬁnancial position.

Other Changes in Financial Position
In 2011, the negative change of € -457 million results fromincreases in ﬁnancing liabilities due to the newly consolidated
companies. In 2010 there was a small positive change of€ 25 million, compared to a positive change of € 346 million in2009 which reﬂects among others currency effects on ﬁnancing
liabilities.

2.1.6.2 Consolidated Cash and Cash
Equivalents and Securities
The cash and cash equivalents and securities portfolio of
the Group is invested mainly in non-speculative ﬁnancial
instruments, mostly highly liquid, such as certiﬁcates of deposit,
overnight deposits, commercial paper, other money market
instruments and bonds. See “— 2.1.7.2 Interest Rates” and“Notes to the Consolidated Financial Statements (IFRS) —Note 34A: Financial risk management”.
EADS has a fully automated cross-border cash pooling system(covering France, Germany, Spain, the Netherlands, the UK and
the US). The cash pooling system enhances management’s
ability to assess reliably and instantaneously the cash positionof each subsidiary within the Group and enables management
to allocate cash optimally within the Group depending upon
shifting short-term needs.
Total cash and cash equivalents (including available-forsale securities) in 2011 included € 0.7 billion from the 37.5%
consolidation of MBDA, compared to € 0.7 billion in 2010 and€ 0.8 billion in 2009.

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2.1.6.3 Consolidated Financing Liabilities
The following table sets forth the composition of EADS’ consolidated ﬁnancing liabilities, including both short- and long-term debt,
as of 31 December 2011:31 December 2011(in €m)Not exceeding 1 year

Over 1 year up to 5 years

More than 5 years

Total

Bonds

-

1,056

549

1,605

Liabilities to financial institutions

74

801

679

1,554

Loans

279

187

185

651

Finance Leases

13

59

112

184

Others

1,110

-

-

1,110

Total

1,476

2,103

1,525

5,104 (1)(1) Financing liabilities include non-recourse Airbus debt for € 455 million.

The outstanding balance of ﬁnancing liabilities increased
from € 4.3 billion as of 31 December 2010 to € 5.1 billion as of
31 December 2011. This increase is mainly related to new loans
granted by the European Investment Bank (US$ 721 million) andthe Development Bank of Japan (US$ 300 million) in 2011, as
described below.

Development Bank of Japan Credit Facility. In 2011, EADS
entered into a US$ 300 million credit facility maturing in 2021(bullet loan) with the Development Bank of Japan, fully drawn
down and bearing interest at a variable rate of 3-month USD
LIBOR plus 1.15%. EADS concurrently swapped the variableinterest rate into a ﬁxed rate of 4.8%.

Financing liabilities include liabilities connected with sales
ﬁnancing transactions amounting to € 532 million as of
31 December 2011, most of which bore interest at variable
rates. See “— 2.1.6.4 Sales Financing”.

For further information, see “Notes to the Consolidated Financial
Statements (IFRS) — Note 26: Financing liabilities”.

EMTN Programme. EADS has a € 3 billion Euro Medium
Term Note (“EMTN”) Programme in place, with two tranches
outstanding as of 31 December 2011:O € 0.5 billion of notes issued in 2003 and maturing in 2018,
bearing interest at 5.5%(effective interest rate: 5.6%) andsubsequently swapped into a variable rate of 3-month
EURIBOR plus 1.72%; and2.1.6.4 Sales Financing
EADS favours cash sales and encourages independentﬁnancing by customers, in order to avoid retaining credit orasset risk in relation to delivered products. However, in order tosupport product sales, primarily at Airbus, Eurocopter and ATR,EADS may agree to participate in the ﬁnancing of customers, ona case-by-case basis, directly or through guarantees provided
to third parties.

O € 1.0 billion of notes issued in 2009 and maturing in 2016,
bearing interest at 4.625%(effective interest rate: 4.7%)
and subsequently swapped into a variable rate of 3-month
EURIBOR plus 1.57%.

The ﬁnancial markets remain unpredictable, which may cause
EADS to increase its future outlays in connection with customer
ﬁnancing of commercial aircraft, mostly through ﬁnance leases
and secured loans. Nevertheless, it intends to keep the amountas low as possible.

Commercial Paper Programme. EADS has the ability toissue commercial paper on a rolling basis, under a so-called“billet de trésorerie” programme. This commercial paper would
bear interest at ﬁxed or ﬂoating rates with individual maturities
ranging from 1 day to 12 months. The programme has been inplace since 2003 and has a maximum authorised volume limitof € 2 billion. As of 31 December 2011, there was no commercial
paper outstanding under the programme.

Dedicated and experienced teams structure such ﬁnancing
transactions and closely monitor total EADS ﬁnance and asset
value exposure and its evolution in terms of quality, volume
and intensity of cash requirements. EADS aims to structure all
ﬁnancing it provides to customers in line with market-standard
contractual terms so as to facilitate any subsequent sale or
reduction of such exposure.

European Investment Bank Loans. In 2004, the European
Investment Bank granted a long-term loan to EADS in theamount of US$ 421 million maturing in 2014 and bearing interest
at 5.1%(effective interest rate: 5.1%). In 2011, EADS entered intoa US$ 721 million long-term credit agreement maturing in 2021
(with straight line amortisation from August 2015 onwards) with
the European Investment Bank, bearing interest at a variable
rate of 3-month USD LIBOR plus 0.849%. EADS concurrently
swapped the variable interest rate into a ﬁxed rate of 3.2%.

In determining the amount and terms of a ﬁnancing transaction,
Airbus and ATR take into account the airline’s credit rating
as well as risk factors speciﬁc to the intended operating
environment of the aircraft and its expected future value. Market
yields and current banking practices also serve to benchmark
the ﬁnancing terms offered to customers.

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Approximately 10% of the € 5.1 billion of total consolidated ﬁnancing liabilities as of 31 December 2011 are derived from the fundingof EADS’ sales ﬁnancing assets, which are of a long-term nature and have predictable payment schedules.
Set out below is a breakdown of the total amount of sales ﬁnancing liabilities outstanding.
2011

2010

2009

-

-

1

Liabilities to financial institutions

421

491

590

Loans

111

140

142

532

631

733

(in €m)Finance leases

Total sales financing liabilities(1)(1) The amount of total sales financing liabilities as of 31 December 2009 reflects the offsetting of sales financing liabilities by € 306 million. As of 31 December 2010 and 2011, no sales
financing liabilities were offset.

Of the € 532 million total sales ﬁnancing liabilities as of
31 December 2011, € 455 million is in the form of non-recourse
debt, where EADS’ repayment obligations are limited to its
receipts from transaction counterparties. A signiﬁcant portionof ﬁnancial assets representing non-cancellable customer
commitments have terms closely matching those of the related
ﬁnancing liabilities. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 26: Financing liabilities”. See also“— 2.1.2.8 Accounting for Sales Financing Transactions in the
Financial Statements”.
Furthermore, in 1999, Airbus received a reinvestment notefrom Deutsche Bank AG in the amount of US$ 800 million,
bearing a ﬁxed interest rate of 9.88% with an outstanding debtof € 224 million as of 31 December 2011 (2010: € 275 million,
2009: € 305 million).
Sales ﬁnancing transactions are generally collateralised by
the underlying aircraft. Additionally, Airbus, Eurocopter and
ATR beneﬁt from protective covenants and from security
packages tailored according to the perceived risk and the legal
environment of each transaction.
EADS classiﬁes the exposure arising from its sales ﬁnancing
activities into two categories: (i) Customer Financing Exposure,
where the customer’s credit – its ability to perform its
obligations under a ﬁnancing agreement – constitutes therisk; and (ii) Asset Value Exposure, where the risk relates todecreases in the future value of the ﬁnanced aircraft. See also
“Risk Factors — 1. Financial Market Risks — Exposure to Sales
Financing Risk”.

82 I EADS REGISTRATION DOCUMENT 2011

Customer Financing Exposure
Gross exposure. Gross Customer Financing Exposure iscomputed as the sum of (i) the net book value of aircraft underoperating leases; (ii) the outstanding principal amount of ﬁnanceleases or loans; and (iii) the net present value of the maximum
commitment amounts under ﬁnancial guarantees.
Gross Customer Financing Exposure from operating leases,
ﬁnance leases and loans differs from the value of related
assets on EADS’ statement of ﬁnancial position and related
off-balance sheet contingent commitments for the following
reasons: (i) assets are recorded in compliance with IFRS, but
may relate to transactions where there is limited recourse to
Airbus, Eurocopter or ATR; (ii) the value of the assets is impaired
or depreciated on the consolidated statement of ﬁnancial
position; (iii) off-balance sheet gross exposure is calculated as
the net present value of future payments, whereas the ﬁnancial
statements present the total future payments in nominal terms;and (iv) exposure related to certain asset value guarantees
recorded as operating leases in the ﬁnancial statements
is categorised under Asset Value Exposure, not Customer
Financing Exposure.
Airbus’ Gross Customer Financing Exposure amounted to
US$ 1.4 billion (€ 1.1 billion) as of 31 December 2011. The chart
below illustrates the evolution of this exposure during 2011
(in US$ million).

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Evolution of Airbus Gross Exposure during 2011

1,691

December 2010
Additions

Disposals

Amortisation

498

-614

-145

December 2011

1,430

Airbus Gross Customer Financing Exposure as of 31 December
2011 is distributed over 79 aircraft, operated at any time byapproximately 25 airlines. In addition, the level of exposure
may include other aircraft-related assets, such as spare parts.
90% of Airbus Gross Customer Financing Exposure is
distributed over 13 airlines in 11 countries (this excludes
backstop commitments).

Net exposure. Net exposure is the difference between gross
exposure and the estimated value of the collateral security.
Collateral value is assessed using a dynamic model based on
the net present value of expected future rentals from the aircraftin the leasing market and potential cost of default. This valuation
model yields results that are typically lower than residual value
estimates by independent sources in order to allow for whatmanagement believes is its conservative assessment of market
conditions, as well as for repossession and transformation
costs. See “— 2.1.2.8 Accounting for Sales Financing
Transactions in the Financial Statements”.

ATR’s Gross Customer Financing Exposure amounted
to US$ 0.1 billion (€ 0.1 billion) as of 31 December 2011.
This exposure is distributed over 129 aircraft. EADS
proportionally consolidates only 50% of ATR and shares the risk
with its partner, Alenia.
Eurocopter’s Gross Customer Financing Exposure amounted
to € 0.1 billion as of 31 December 2011. This exposure is
distributed over 43 helicopters.

EADS REGISTRATION DOCUMENT 2011 I 83

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The table below shows the transition from gross to net ﬁnancing exposure (which does not include asset value guarantees) as of
31 December 2011, 2010 and 2009. It includes 100% of Airbus’ and Eurocopter’s customer ﬁnancing exposure and 50% of ATR’s
exposure, reﬂecting EADS’ stake in ATR.
Airbus(in €m)(1)

Note

ATR 50%Eurocopter

Total EADS

31/12/2011 31/12/2010 31/12/2009 31/12/2011 31/12/2010 31/12/2009 31/12/2011 31/12/2010 31/12/2009 31/12/2011 31/12/2010 31/12/2009

Operating leases

15

497

579

341

-

-

-

-

-

-

497

579

341

Finance leases& loans

17

1,062

1,234

1,569

13

14

4

46

41

29

1,121

1,289

1,602

Others

-

-

-

29

55

108

-

-

-

29

55

108

On balance
sheet customer
financing

1,559

1,813

1,910

42

69

112

46

41

29

1,647

1,923

2,051

Off balance
sheet customer
financing

357

448

446

56

46

47

40

48

47

453

542

540

Non-recourse
transactions onbalance sheet

(721)

(880)

(985)

-

-

-

-

-

-

(721)

(880)

(985)

Off balance sheet
adjustments

(90)

(115)

(111)

-

-

-

-

-

-

(90)

(115)

(111)

Gross Customer
Financing
Exposure

33

1,105

1,266

1,260

98

115

159

86

89

76

1,289

1,470

1,495

Collateral values

33

(627)

(759)

(772)

(86)

(105)

(145)

(53)

(62)

(55)

(766)

(926)

(972)

478

507

488

12

10

14

33

27

21

523

544

523

Net exposure
Assetimpairments
and provisions on:
Operating leases

33

(127)

(75)

(70)

-

-

-

-

-

-

(127)

(75)

(70)

Finance leases& loans

33

(172)

(176)

(158)

-

-

-

-

-

-

(172)

(176)

(158)

On balance sheet
commitments

33

-

-

-

(12)

(10)

(14)

(33)

(27)

(21)

(45)

(37)

(35)

Off balance sheet
commitments

33

(179)

(256)

(260)

-

-

-

-

-

-

(179)

(256)

(260)

(478)

(507)

(488)

(12)

(10)

(14)

(33)

(27)

(21)

(523)

(544)

(523)

-

-

-

-

-

-

-

-

-

-

-

-

Asset
impairments
and provisions
Residual exposure(1) The indicated numbers refer to the number of the Notes to Consolidated Financial Statements (IFRS).

The gross value of consolidated operating leases shown in
the table above (€ 497 million in 2011, € 579 million in 2010and € 341 million in 2009) is accounted for in “Property, plantand equipment” at net book value of operating leases before
impairment. Corresponding accumulated asset impairments(€ -127 million in 2011, € -75 million in 2010 and € -70 million
in 2009) are charged against this net book value. See“Notes to the Consolidated Financial Statements (IFRS) —Note 15: Property, plant and equipment” and “— Note 33:
Commitments and contingencies”.
Also shown in the table above is the gross value forconsolidated ﬁnance leases and loans (€ 1,121 million in 2011,€ 1,289 million in 2010 and € 1,602 million in 2009). Consolidated
ﬁnance leases (€ 618 million in 2011, € 731 million in 2010 and€ 845 million in 2009) are accounted for as long-term ﬁnancial
assets, recorded at their book value before impairment. Loans(€ 503 million in 2011, € 558 million in 2010 and € 757 million

84 I EADS REGISTRATION DOCUMENT 2011

in 2009) are also accounted for as long-term ﬁnancial assets,
recorded at their outstanding gross amount. Corresponding
overall accumulated impairments (€ -172 million in 2011,€ -176 million in 2010 and € -158 million in 2009) are charged
against the book values. See “Notes to the Consolidated
Financial Statements (IFRS) — Note 17: Investments inassociates accounted for under the equity method, otherinvestments and other long-term ﬁnancial assets”.
Off-balance sheet customer ﬁnancing exposure at Airbus,
ATR (accounted for at 50% by EADS) and Eurocopter was€ 453 million in 2011, € 542 million in 2010 and € 540 million
in 2009. These amounts reﬂect the total nominal value of
future payments under lease in/lease out structures. The
corresponding net present value of future payments (discounted
and net of mitigating factors) is included in total Gross Financing
Exposure for an amount of € 363 million in 2011, € 427 million in2010 and € 429 million in 2009. A provision of € 179 million has

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOPERATING AND FINANCIAL REVIEW

1been accrued for in EADS’ balance sheet as of 31 December
2011 to cover the full amount of the corresponding net
exposure. See “Notes to the Consolidated Financial Statements(IFRS) — Note 33: Commitments and contingencies”.

Asset Value Exposure
A signiﬁcant portion of EADS’ asset value exposure arises
from outstanding asset value guarantees, primarily at Airbus.
Management considers the ﬁnancial risks associated with suchguarantees to be manageable. Three factors contribute tothis assessment: (i) the guarantee only covers a tranche of theestimated future value of the aircraft, and its level is considered
prudent in comparison to the estimated future value of eachaircraft; (ii) the asset value guarantee-related exposure isdiversiﬁed over a large number of aircraft and customers; and(iii) the exercise dates of outstanding asset value guarantees
are distributed through 2022, resulting in low levels of exposure
maturing in any year. In addition, these asset value guarantees
must generally be exercised during a pre-deﬁned window andcontain speciﬁc conditions that must be met in order for them tobe exercisable.
Gross exposure. Gross Asset Value Exposure is deﬁned as thesum of the maximum guaranteed tranche amounts (as opposedto the sum of the maximum guaranteed asset value amounts)
under outstanding asset value guarantees. As of 31 December
2011, Gross Asset Value Exposure was US$ 2.1 billion(€ 1.7 billion). The off-balance sheet portion of Gross Asset Value
Exposure, representing asset value guarantees with net present
values of less than 10% of the sales price of the corresponding
aircraft, was € 1,117 million, excluding € 354 million where therisk is considered to be remote. In many cases, the risk islimited to a speciﬁc portion of the residual value of the aircraft.
The remaining Gross Asset Value Exposure is recorded
on-balance sheet.
Net exposure. The present value of the risk inherent to thegiven asset value guarantees, where a settlement is considered
to be probable, is fully provided for and included in the total
amount of provisions for asset value risks of € 735 million.
This provision covers a potential expected shortfall between
the estimated value of the aircraft of the date upon which theguarantee can be exercised and the value guaranteed on atransaction basis taking counter guarantees into account.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 25C: Other provisions”.

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Backstop Commitments
While backstop commitments to provide ﬁnancing related
to orders on Airbus’ and ATR’s backlog are also given, suchcommitments are not considered to be part of gross exposure
until the ﬁnancing is in place, which occurs when the aircraft
is delivered. This is due to the fact that (i) past experiencesuggests it is unlikely that all such proposed ﬁnancings actually
will be implemented (although it is possible that customers
not beneﬁting from such commitments may neverthelessrequest ﬁnancing assistance ahead of aircraft delivery), (ii) until
the aircraft is delivered, Airbus or ATR retain the asset anddo not incur an unusual risk in relation thereto (other than thecorresponding work-in-progress), and (iii) third parties may
participate in the ﬁnancing.
Airbus orders and backstop commitments. Over the last
three years (2009, 2010 and 2011), the average number of newly
ordered aircraft in respect of which a backstop commitment has
been offered amounted to 9% of the average orders recorded
over the same period, i.e. 65 supported aircraft per year out of
755 orders per year on average. These ﬁnancing commitments
may or may not materialise at the contractual delivery date of
the aircraft. In addition, the level of ﬁnancing support together
with the terms and conditions offered to customers will vary.
Airbus Deliveries and Financing Support Implemented
at Delivery. Over the last three years (2009, 2010 and 2011),
the average number of aircraft delivered in respect of which
ﬁnancing support has been provided by Airbus amounted to
2% of the average number of deliveries over the same period,
i.e. 12 aircraft ﬁnanced per year out of 514 deliveries per year on
average. This ﬁnancing support may take the form of senior or
junior loans or guarantees. Such support may have originatedfrom EADS’ contractual backstop commitments provided atsigning of the purchase agreement (see above) or may be
the result of a request for ﬁnancing assistance made by thecustomer ahead of aircraft delivery.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 33: Commitments and contingencies” for further
discussion of EADS’ sales ﬁnancing policies and accounting
procedures.

2.1.7 Hedging Activities
2.1.7.1

Foreign Exchange Rates

More than 60% of EADS’ revenues are denominatedin US dollars, with approximately half of such currency
exposure “naturally hedged” by US dollar-denominated costs.
The remainder of costs is incurred primarily in euros, and to alesser extent, in pounds sterling. Consequently, to the extent
that EADS does not use ﬁnancial instruments to hedge its
net current and future exchange rate exposure from the timeof a customer order to the time of delivery, its proﬁts will beaffected by market changes in the exchange rate of the US
dollar against these currencies, and to a lesser extent, bymarket changes in the exchange rate of pound sterling against
the euro. As EADS intends to generate proﬁts only from its
operations and not through speculation on foreign currency
exchange rate movements, EADS uses hedging strategies solely
to mitigate the impact of exchange rate ﬂuctuations on its EBIT*.
See “— 2.1.3.3 EBIT* Performance by Division — Foreign

EADS REGISTRATION DOCUMENT 2011 I 85

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1Currency Impact on EBIT*”. See also “Risk Factors — 1. Financial
Market Risks — Exposure to Foreign Currencies”.
As EADS uses ﬁnancial instruments to hedge its net foreign
currency exposure, the portion of its US dollar-denominatedrevenues not hedged by ﬁnancial instruments (approximately
40% of total consolidated revenues) is exposed to changes
in exchange rates. Of this non-hedged portion of revenues, acertain percentage (relating to customer pre-delivery payments)
is converted into euro at the spot rate effective at the time thepayment was received by EADS. The remainder of non-hedged
US dollar-denominated revenues (corresponding to payments
upon delivery) are subject to changes in the spot rate at the timeof delivery. See “— 2.1.2.7 Foreign Currency Translation”.
Exposure on aircraft sales. For products such as aircraft,
EADS typically hedges forecasted sales in US dollars.
The hedged items are deﬁned as the ﬁrst forecasted highly
probable future cash inﬂows for a given month based upon ﬁnal
payments at delivery. The amount of the expected ﬂows to behedged can cover up to 100% of the equivalent of the net US
dollar exposure at inception. For EADS, a forecasted transaction
is regarded as highly probable if the future delivery is includedin the ﬁrm order book or is very likely to materialise in view ofcontractual evidence (e.g., a letter of intent). The coverage ratio
is adjusted to take into account macroeconomic movements
affecting the spot and interest rates as well as the robustness ofthe commercial cycle.
Exposure on non-aircraft business. For the non-aircraftbusiness, EADS typically hedges inﬂows and outﬂows of foreign
currencies from sales and purchase contracts following thesame logic, typically in lower volumes.
Exposure on treasury operations. In connection with its
treasury operations, EADS enters into foreign exchange swaps(notional amount of € 5.4 billion as of 31 December 2011) toadjust for short-term ﬂuctuations of non-euro cash balancesat the Business Unit level. Year-to-year changes in the fairmarket value of these swaps are recorded in the consolidated
income statement in the line item “other ﬁnancial result” if notdesignated as hedging instruments. These changes may have amaterial impact on EADS’ net income.

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Embedded derivatives. EADS also has foreign currency
derivative instruments which are embedded in certain purchaseand lease contracts denominated in a currency other than thefunctional currency of the signiﬁcant parties to the contract,
principally US dollar and pound sterling. Gains or losses relating
to such embedded foreign currency derivatives are reported in
the line item “other ﬁnancial result” if not designated as hedging
instruments. These changes may have a material impact on
EADS’ net income. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 2: Summary of signiﬁcant accounting
policies — Signiﬁcant accounting policies — Derivative ﬁnancial
instruments — Embedded derivatives”. In addition, EADS
hedges currency risk arising from ﬁnancial transactions in othercurrencies than euro, such as funding transactions or securities.
Hedge Portfolio. EADS manages a long-term hedge portfoliowith a maturity of several years covering its net exposure
to US dollar sales, mainly relating to the activities of Airbus
Commercial (and to a lesser extent, of ATR, Eurocopter,
Astrium and Cassidian). The net exposure is deﬁned as the total
currency exposure (US dollar-denominated revenues), net of thepart that is “naturally hedged” by US dollar-denominated costs.
The hedge portfolio covers the vast majority of the Group’s
hedging transactions.
For ﬁnancial reporting purposes, EADS mostly designates
a portion of the total ﬁrm future cash ﬂows as the hedged
position to cover its expected net foreign currency exposure.
Therefore, as long as the actual gross foreign currency cash
inﬂows (per month) exceed the portion designated as being
hedged, a postponement or cancellation of sales transactions
and corresponding cash inﬂows have no impact on the hedging
relationship. As hedging instruments, EADS primarily uses
foreign currency forwards and synthetic forwards, as well as
options. EADS may adjust the pace of its hedging activity
depending on the size of its portfolio and its available capacitywith banks in the forward markets.

The table below sets forth the notional amount of foreign exchange hedges in place as of 31 December 2011, and the average US
dollar rates applicable to corresponding EBIT*.

Total Hedges (in US$bn)

2012

2013

2014

2015

2016+

Total

(1)

(1)

17.2

11.7

3.4

75.1

21.4

21.4

Forward Rates (in US$) (2)€ -US$

1.36

1.37

1.37

1.39

1.36

£-US$

1.62

1.58

1.57

1.60

1.57

(1) Including US$ 1.5 billion and US$ 1 billion of options in 2012 and 2013, respectively.
(2) Including options at their least favourable rates.

For further information regarding the notional amounts of the Group’s foreign exchange derivative ﬁnancial instruments, see “Notes
to the Consolidated Financial Statements (IFRS) — Note 34C: Notional amounts of derivative ﬁnancial instruments”.

86 I EADS REGISTRATION DOCUMENT 2011

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2.1.7.2 Interest Rates
EADS uses an asset and liability management approach withthe objective of limiting its interest rate risk. EADS attempts tomatch the risk proﬁle of its assets with a corresponding liability
structure. The remaining net interest rate exposure is managed
through several types of instruments in order to minimise risks
and ﬁnancial impacts. Therefore, EADS may use interest rate
derivatives for hedging purposes.
Hedging instruments that are speciﬁcally related to debt
instruments (such as the notes issued under the EMTN
programme) have at most the same nominal amounts, as wellas the same maturity dates, as the corresponding hedged item.

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Regarding the management of its cash balance, EADS invests
in short- as well as medium-term instruments and/or ﬂoating
rate instruments in order to further minimise any interest risk in
its cash and securities portfolio.
For information regarding the notional amounts of the Group’s
interest rate derivative ﬁnancial instruments, see “Notes to theConsolidated Financial Statements (IFRS) — Note 34C: Notionalamounts of derivative ﬁnancial instruments”. For further
information relating to market risk and the ways in which EADS
attempts to manage this risk, see “Notes to the Consolidated
Financial Statements (IFRS) — Note 34A: Financial risk
management”.

2

2.2 Financial Statements
The Consolidated Financial Statements (IFRS) and the Company
Financial Statements of EADS for the year ended 31 December
2011, together with the related notes, appendices and auditors’
reports, shall be deemed to be incorporated in and form part ofthis Registration Document.
In addition, the English versions of the following documents
shall be deemed to be incorporated in and form part of this
Registration Document:
O the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2009, together with the related notes,
appendices and auditors’ reports, as incorporated byreference in the Registration Document filed in English with,and approved by, the AFM on 21 April 2010 and filed in
English with the Chamber of Commerce of The Hague; andO the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2010, together with the related notes,
appendices and auditors’ reports, as incorporated byreference in the Registration Document filed in English with,and approved by, the AFM on 19 April 2011 and filed in
English with the Chamber of Commerce of The Hague.
Copies of the above-mentioned documents are available free ofcharge upon request in English, French, German and Spanish
at the registered ofﬁce of the Company and on www.eads.com(Investor Relations > Events and Reports > Annual Report andRegistration Document).
Copies of the above-mentioned Registration Documents
are also available in English on the website of the AFM
on www.afm.nl (Professionals > Registers > Approved
prospectuses). The above-mentioned ﬁnancial statements
are also available in English for inspection at the Chamber ofCommerce of The Hague.
EADS conﬁrms that the reports of the auditors incorporated
by reference herein have been accurately reproduced andthat as far as EADS is aware and is able to ascertain fromthe information provided by the auditors, no facts have been
omitted which would render such reports inaccurate or
misleading.

EADS REGISTRATION DOCUMENT 2011 I 87

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSSTATUTORY AUDITORS’ FEES

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2.3 Statutory Auditors’ Fees
Services provided to the Group by statutory auditors and members of their network for the ﬁnancial years 2011, 2010 and 2009:
KPMG Accountants N.V.
2011
Amountin €K

Audit process,certification, examinationof individual andconsolidated accounts
Additional tasks
Sub-total

2010%

Amount
in €K

5,675

70.0%

1,678

20.7%

7,353

90.7%

Legal, tax, employment

715

8.8%

628

Information technology

37

0.5%

12

Ernst & Young Accountants LLP
2009

2011

%

Amount
in €K

%

5,710

81.1%

5,238

516

7.4%

1,258

6,226 88.5%

2010

Amountin €K%Amount
in €K

72.3%
17.4%

5,851

69.2%

2,338

27.6%

6,496

89.7%

8,189 96.8%

8.9%

354

4.9%

201

2.4%

123

0.2%

200

2.7%

70

0.8%

121

2009
%

Amount
in €K

%

4,493

70.8%

4,390

79.9%

1,607

25.4%

969

17.6%

6,100 96.2%

5,359

97.5%

1.9%

137

2.5%

1.9%

-

-

Audit

Other services
as relevant

Other(to be specified if >10%of the fees for the audit)

6

0.1%

172

2.4%

194

2.7%

-

-

-

-

-

-

Sub-total

758

9.3%

812

11.5%

748

10.3%

271

3.2%

244

3.8%

137

2.5%

Total

8,111

100%

7,038

100%

7,244

100%

8,460

100%

6,344

100%

5,496

100%

2.4 Information Regarding the Statutory Auditors
Date of first
appointment

Expiration of current
term of office (1)KPMG Accountants N.V.
Rijnzathe 14, 3454 PV De Meern — The Netherlands
Represented by Jack Van Rooijen

10 May 2000

31 May 2012

Ernst & Young Accountants LLP
Boompjes 258, 3011 XZ Rotterdam — The Netherlands
Represented by C. T. Reckers

24 July 2002

31 May 2012

(1) A resolution will be submitted to the Annual General Meeting of Shareholders to be held on 31 May 2012, in order to appoint Ernst & Young Accountants LLP and KPMG
Accountants N.V. as the Company’s auditors for the 2012 financial year.

KPMG Accountants N.V., Ernst & Young Accountants LLP and their respective representatives are registered with the Royal NIVRA(Nederlands Instituut van Register Accountants).

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General Description of the Company
and its Share Capital
3.1 General Description of the Company

92

3.1.1 Commercial and Corporate Names, Seat and Registered Ofﬁce

92

3.1.2 Legal Form

92

3.1.3 Governing Laws and Disclosures92

3.1.4 Date of Incorporation and Duration of the Company

94

3.1.5 Objects of the Company

94

3.1.6 Commercial and Companies Registry94

3.1.7 Inspection of Corporate Documents

95

3.1.8 Financial Year95

3.1.9 Allocation and Distribution of Income

95

3.1.10 General Meetings

95

3.1.11 Disclosure of Holdings

97

3.1.12 Mandatory Offers

98

3.2 General Description of the Share Capital100

3.2.1 Issued Share Capital100

3.2.2 Authorised Share Capital100

3.2.3 Modiﬁcation of Share Capital or Rights Attached to the Shares

100

3.2.4 Securities Granting Access to the Company’s Share Capital100

3.2.5 Changes in the Issued Share Capital since Incorporation of the Company

101

3.3 Shareholdings and Voting Rights

102

3.3.1 Shareholding Structure102

3.3.2 Relationships with Principal Shareholders

103

3.3.3 Form of Shares

107

3.3.4 Changes in the Shareholding of the Company Since its Incorporation

108

3.3.5 Persons Exercising Control over the Company

109

3.3.6 Simpliﬁed Group Structure Chart

109

3.3.7 Purchase by the Company of its Own Shares111

3.4 Dividends

114

3.4.1 Dividends and Cash Distributions Paid Since the Incorporation of the Company

114

3.4.2 Dividend Policy of EADS

114

3.4.3 Unclaimed Dividends

115

3.4.4 Taxation

115

3.5 Annual Securities Disclosure Report

116
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GENERAL DESCRIPTION OF THE COMPANY

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3.1 General Description of the Company
3.1.1 Commercial and Corporate Names, Seat and Registered Ofﬁce
Commercial Name: EADS

Seat (statutaire zetel): Amsterdam

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

Tel: +31 (0)71 5245 600
Fax: +31 (0)71 5232 807

Registered Ofﬁce: Mendelweg 30, 2333 CS Leiden, theNetherlands

3.1.2 Legal Form
The Company is a public limited liability company (naamloze vennootschap) organised under the laws of the Netherlands.
As a company operating worldwide, EADS is subject to, and operates under, the laws of each country in which it conducts
business.

3.1.3 Governing Laws and Disclosures
The Company is governed by the laws of the Netherlands (inparticular Book 2 of the Dutch Civil Code) and by its Articles of
Association (the “Articles of Association”).

Finally, Regulated Information must be made available forcentral storage by a mechanism that is ofﬁcially designated by
EADS’ home member state.

The Company is subject to various legal provisions of the Dutch
Financial Supervision Act (Wet op het financieel toezicht) (the“WFT”). In addition, given the fact that its shares are admitted
for trading on a regulated market in France, Germany andSpain, the Company is subject to certain laws and regulationsin these three jurisdictions. A summary of the main regulations
applicable to the Company in relation to information to be madepublic in these three jurisdictions, as well as the Netherlands, is
set out below.

Dutch Regulations

3.1.3.1 Periodic Disclosure Obligations
Pursuant to Directive 2004/109/EC on the harmonisation oftransparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market (the “Transparency Directive”), EADS is required
to disclose certain periodic and on-going information (the“Regulated Information”).
Pursuant to the Transparency Directive, EADS must
disseminate such Regulated Information throughout theEuropean Community in a manner ensuring fast access to suchinformation on a non-discriminatory basis. For this purpose,
EADS may use a professional service provider (wire). In addition,
Regulated Information must be ﬁled at the same time with therelevant competent market authority. EADS must then ensurethat Regulated Information remains publicly available for at least
ﬁve years.
92 I EADS REGISTRATION DOCUMENT 2011

For the purpose of the Transparency Directive, supervision of
EADS is effected by the member state in which it maintains
its registered ofﬁce, which is the Netherlands. The competentmarket authority that assumes ﬁnal responsibility for supervisingcompliance by EADS in this respect is the AFM.
Under the Transparency Directive as implemented underDutch law, EADS is subject to a number of periodic disclosure
requirements, such as:
O publishing an Annual Financial Report, together with an audit
report drawn up by the Statutory Auditors, within four months
after the end of each financial year;
O publishing a semi-Annual Financial Report, within two months
after the end of the first six months of the financial year; andO publishing quarterly financial reports, within a period between
ten weeks after the beginning and six weeks before the endof the first or second six-month period of the financial year.
In addition, the Company must ﬁle with the AFM, within ﬁve
days following their adoption by the Company’s shareholders,
its audited consolidated annual ﬁnancial accounts,
the management report, the Auditors’ report and otherinformation related to the ﬁnancial accounts.

GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
GENERAL DESCRIPTION OF THE COMPANY

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The Company has also provided in this Registration Document
a list of certain corporate and ﬁnancial documents and otherinformation that it has published or made available to the public
over the last 12 months and details of where these documents
can be obtained (see “— 3.5 Annual Securities Disclosure
Report”).

French Regulations
Since the Transparency Directive was implemented in France
on 20 January 2007, EADS is no longer required to comply
with certain disclosure obligations pursuant to the generalregulations of the AMF.
In accordance with the requirement set forth in the Transparency
Directive to disseminate Regulated Information throughout theEuropean Community, EADS is required to provide simultaneously
in France the same information as that provided abroad.

German Regulations
Since the Transparency Directive was implemented in Germany
on 20 January 2007, EADS is no longer required to comply withcertain disclosure obligations pursuant to the German Stock
Exchange Act (Börsengesetz) and the German Stock Exchange
Admissions Regulation (Börsenzulassungs-Verordnung).
Due to the listing of the Company’s shares in the Prime
Standard sub-segment of the Regulated Market (regulierter
Markt) of the Frankfurt Stock Exchange, the Company issubject to certain post-listing obligations as described below.
The Company is included inter alia in the selection index MDAX,
the MidCap index of Deutsche Börse AG.
Pursuant to sections 50 and 51 of the Exchange Rules(Börsenordnung) of the Frankfurt Stock Exchange, theCompany is required to publish consolidated annual andhalf-yearly ﬁnancial statements as well as quarterly reports,
which may be prepared in English only. In addition, pursuant tosection 52 of the Exchange Rules, the Company is required to
publish a ﬁnancial calendar at the beginning of each ﬁnancial
year in German and English. The Company is also required tohold an analysts’ meeting at least once per year in addition to
the press conference regarding the annual ﬁnancial statements.
Save for certain exceptions, pursuant to section 69 of theGerman Stock Exchange Admissions Regulation, the Company
has to apply for admission of shares issued at a later date to
the Regulated Market (regulierter Markt) of the Frankfurt Stock
Exchange.

Spanish Regulations
Since the entering into force of the law and regulation
implementing the Transparency Directive in Spain in April and
December 2007, respectively, EADS is no longer required
to comply with certain disclosure obligations pursuant to
the Spanish Securities Act as developed by Royal Decree1362/2007 of 19 October 2007.
In accordance with the requirement set forth in theTransparency Directive to disseminate Regulated Information
throughout the European Community, EADS is required toprovide simultaneously in Spain the same information as thatprovided abroad.

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3.1.3.2 Ongoing Disclosure Obligations
Pursuant to the Transparency Directive, Regulated Information
includes in particular “inside information” as deﬁned pursuant to
Article 6 of Directive 2003/6/EC on insider dealing and market
manipulation (the “Market Abuse Directive”). Such informationmust be disseminated throughout the European Community(see introduction to section “— 3.1.3.1 Periodic Disclosure
Obligations”).
Inside information consists of information of a precise nature
which has not been made public that relates, directly or
indirectly, to one or more issuers of ﬁnancial instruments or
to one or more ﬁnancial instruments and which, if it weremade public, would be likely to have a signiﬁcant effect on theprices of those ﬁnancial instruments or on the price of related
derivative ﬁnancial instruments.
Inside information must be disclosed to the markets as soon as
possible. However, an issuer may under its own responsibility
delay the public disclosure of inside information so as not toprejudice its legitimate interests provided that such omission
would not be likely to mislead the public and provided that theissuer is able to ensure the conﬁdentiality of that information.

Dutch Regulations
Following the implementation of the Transparency Directive into
Dutch law, EADS must publicly disclose Regulated Information
and also ﬁle Regulated Information with the AFM, which willkeep all relevant Regulated Information in a publicly available
register. EADS will, whenever it discloses inside information
pursuant to applicable mandatory law as part of the RegulatedInformation, disclose and disseminate throughout the European
Community any such information.
Under Dutch law, the Company must also publish any change inthe rights attached to its shares, as well as any changes in therights attached to any rights issued by the Company to acquire
the Company’s shares.

French Regulations
Any inside information as deﬁned above will be disclosed
in France by means of dissemination throughout theEuropean Community, as it will be organised under Dutch
law implementing the Transparency Directive so as to provide
simultaneously in France equivalent information to that provided
abroad.

German Regulations
Any inside information as deﬁned above will be disclosed
in Germany by means of dissemination throughout theEuropean Community, as it will be organised under Dutch
law implementing the Transparency Directive so as to provide
simultaneously in Germany equivalent information to thatprovided abroad.

Spanish Regulations
Pursuant to Article 82 of the Spanish Securities Act, theCompany is required to make public, as soon as possible, any
fact or decision that may substantially affect the quotation ofits shares (“a relevant event”). Any relevant event must be

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notiﬁed to the CNMV simultaneously with its diffusion by anyother means, as soon as the relevant fact is known, the relevant
decision has been made or, the relevant agreement has been
executed, as the case may be. EADS may, under its own
responsibility, delay the publication of any relevant event if itconsiders that such publication damages its legitimate interests,
provided that such lack of publication does not mislead
the public and that EADS is in a position to guarantee theconﬁdentiality of the relevant information. Nonetheless, EADS
will immediately inform the CNMV should it decide to delay the
publication of any relevant event. Furthermore, pursuant to the
Spanish Securities Act, EADS must post details of any relevant
event on its website. EADS must try to ensure that the relevant
information is disclosed simultaneously to all types of investors
in the member States of the European Union where it is listed.
An order dated 1 June 2009 requires that EADS appoint atleast one ofﬁcial spokesperson to respond to any inquiries that
the CNMV may have in relation to a relevant event disclosed
by EADS. This spokesperson must be able to ofﬁcially reply onbehalf of EADS and must have access to senior management inorder to verify any information requested by the CNMV.
A circular dated 4 November 2009 further provides thatthe publication of any relevant event must be made via
the CIFRADOC system (the CNMV’s electronic system for
notiﬁcations and communications) and that publication
by a different means is only possible under exceptional
circumstances, subject to approval by the General Markets
Directorate (Dirección General de Mercados).

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Pursuant to the Spanish Securities Act and its implementing
rules and regulations, EADS is also required:(i)to have rules of the Board of Directors which must be filedwith the CNMV and published on EADS’ website;(ii) to file with the CNMV a description of the relevant Dutch
law provisions and provisions in the Articles of Association
governing the conduct of shareholders’ meetings and postsuch description on its website;(iii) to have a website which must contain as a minimum theinformation specified by Spanish regulations;(iv) to file a Corporate Governance Report with the CNMV on anannual basis; and(v) in respect of the provisions of any shareholders’ agreement
which relate to the exercise of voting rights at shareholders’meetings or restrictions or conditions on the free transferabilityof shares or convertible bonds, to (a) provided EADS is aparty to the shareholders’ agreement, file such provisions with
the CNMV which will then publish the provisions as a relevant
event, (b) post the provisions on EADS’ website, unless the
CNMV exempts EADS from doing so, and (c) set out detailsof the provisions in the annual Corporate Governance Reportreferred to in (iv) above.

3.1.4 Date of Incorporation and Duration of the Company
The Company was incorporated on 29 December 1998 for an unlimited duration.

3.1.5 Objects of the Company
Pursuant to Article 2 of the Articles of Association, theobjects of the Company are to hold, co-ordinate and manage
participations or other interests and to ﬁnance and assume
liabilities, provide for security and/or guarantee debts of legal
entities, partnerships, business associations and undertakingsthat are involved in:

O the aeronautic, defence, space and/or communicationindustry; orO activities that are complementary, supportive or ancillary
thereto.

3.1.6 Commercial and Companies Registry
The Company is registered with the Registry of the Chamber of Commerce of The Hague (Handelsregister van de Kamer van
Koophandel en Fabrieken voor Den Haag) under number 24288945.

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3.1.7 Inspection of Corporate Documents
The Articles of Association are available for inspection in Dutchat the Chamber of Commerce of The Hague.
In France, the Articles of Association are available at the headofﬁce of EADS in France (37, boulevard de Montmorency, 75016
Paris, France, Tel.: +33 1 42 24 24 24).

In Germany, the Articles of Association are available at the headofﬁce of EADS in Germany (Willy-Messerschmitt-Str. − Tor 1,
81663 Munich, Germany, Tel.: +49 89 60 70).
In Spain, the Articles of Association are available at the CNMV
and at the head ofﬁce of EADS in Spain (Avda. Aragón 404,
28022 Madrid, Spain, Tel.: +34 91 585 70 00).

3.1.8 Financial YearThe ﬁnancial year of the Company starts on 1 January and ends on 31 December of each year.

3.1.9 Allocation and Distribution of Income
3.1.9.1 Dividends
The Board of Directors shall determine which part of the proﬁts
of the Company shall be attributed to reserves. The remaining
distributable proﬁt shall be at the disposal of the shareholders’meeting.
The shareholders’ meeting may resolve (if so proposed by the
Board of Directors) that all or part of a dividend shall be paid inshares of the Company as opposed to cash.
The declaration of a dividend, an interim dividend or another
distribution to the shareholders shall be made known to themwithin seven days after such declaration. Declared dividends
shall be payable within four weeks of such declaration unless

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

3.1.9.2 Liquidation
In the event of the dissolution and liquidation of the Company,
the assets remaining after payment of all debts and liquidation
expenses shall be distributed amongst the holders of the sharesin proportion to their shareholdings.

3.1.10 General Meetings
3.1.10.1 Calling of Meetings
Shareholders’ Meetings are held as often as the Board of
Directors deems necessary or upon the request of shareholders
holding, individually or together, at least 10% of the total issued
share capital of the Company. The Annual General Meeting of
Shareholders of the Company is held within six months of theend of the ﬁnancial year.
The Board of Directors must give notice of general meetings at
least 42 days before the day of the Meeting through publicationof a notice on the Company’s website (www.eads.com), which
will be directly and permanently accessible until the Meeting.
The convening notice must state the items as set out under
Section 2:114 paragraph 1 of the Dutch Civil Code.
Shareholders’ Meetings are held in Amsterdam, The Hague,
Rotterdam or Haarlemmermeer (Schiphol Airport). The Boardof Directors may decide that shareholders’ meetings may

be attended by means of electronic or video communication
devices from the locations mentioned in the convening notice.
The Board of Directors must announce the date of the Annual
General Meeting of Shareholders at least 10 weeks before
the Meeting. Requests made by one or more shareholders
collectively representing at least 1% of the issued share capital(or shares having an aggregate market value of € 50 million)
to put items on the agenda for the Annual General Meetingof Shareholders must be effected by the Board of Directors,
if such requests to the Board of Directors have been made atleast 8 weeks prior to the date scheduled for the Meeting andunless reasonableness and fairness require otherwise.
A request as referred to in the preceding paragraph may only
be made in writing. The Board of Directors can decide that in“writing” is understood to include a request that is recorded
electronically.

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3.1.10.2 Right to attend Meetings

3.1.10.3 Majority and Quorum

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. See “— 3.1.10.4
Conditions of Exercise of Right to Vote”. A shareholder or
person who has the right to attend a meeting can see to it that
he is represented by more than one proxy holder, provided that
only one proxy holder can be appointed for each share.

All resolutions are adopted by means of a simple majority of thevotes cast except when a qualiﬁed majority is prescribed by the
Articles of Association or by Dutch law. No quorum is required
for any shareholders’ meeting to be held. Dutch law requires a
special majority for the passing of certain resolutions: inter alia,
capital reduction, exclusion of pre-emption rights in connection
with share issues, statutory mergers or statutory de-mergers;
the passing of such resolutions requires a majority of two-thirdsof the votes cast if 50% of the share capital with voting rights
is not present at the Meeting (or otherwise a simple majority).
In addition, resolutions to amend the Articles of Association or
to dissolve the Company may only be adopted with a majority
of at least two-thirds of the valid votes cast at a shareholders’meeting, whatever the quorum present at such meeting.

The persons who have the right to attend and vote atshareholders’ meetings are those who are so on record in aregister designated for that 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 theshares at the time of that meeting.
Any person who is entitled to exercise the rights set out
in the above paragraph (either in person or by means of awritten proxy) and is attending the Meeting from anotherlocation in such a manner that the person acting as Chairmanof the Meeting is convinced that such a person is properly
participating in the Meeting, shall be deemed to be present or
represented at the Meeting, shall be entitled to vote and shall becounted towards a quorum accordingly.
As a prerequisite to attending the shareholders’ meeting and to
casting votes, the Board of Directors, or alternatively an entity
or person so designated by the Board of Directors, should be
notiﬁed in writing by each holder of one or more shares and those
who derive the aforementioned rights from these shares, notearlier than the Registration Date, of the intention to attend theMeeting. Ultimately this notice must be received by the Board of
Directors, or alternatively an entity or person so designated by the
Board of Directors, on the day mentioned in the convening notice.
Holders of shares that are registered in the shareholders’register kept in Amsterdam have the option of holding themthrough Euroclear France S.A. In this case the shares areregistered in the name of Euroclear France S.A.
Shareholders holding their EADS shares through Euroclear
France S.A. who wish to attend general meetings will have torequest from their ﬁnancial intermediary or accountholder anadmission card and be given a proxy to this effect from Euroclear
France S.A. in accordance with the instructions speciﬁed by
the Company in the convening notice. For this purpose, ashareholder will also be able to request that it be registereddirectly (and not through Euroclear France S.A.) in the registerof the Company. However, only shares registered in the name ofEuroclear France S.A. may be traded on stock exchanges.
In order to exercise their voting rights, the shareholders will
also be able, by contacting their ﬁnancial intermediary or
accountholder, to give their voting instructions to Euroclear
France S.A. or to any other person designated for this purpose,as speciﬁed by the Company in the convening notice.
Pursuant to its Articles of Association, EADS may provide forelectronic means of attendance, speaking and voting at theshareholders’ meetings. The use of such electronic means will
depend on the availability of the necessary technical means andmarket practice.

96 I EADS REGISTRATION DOCUMENT 2011

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

3.1.10.4 Conditions of Exercise of Right
to VoteIn all shareholders’ meetings, each shareholder has one votein respect of each share it holds. The major shareholders of
EADS – as set forth in “— 3.3.2 Relationships with Principal
Shareholders” – do not enjoy different voting rights from thoseof the other shareholders.
A shareholder whose shares are subject to a pledge or usufruct
shall have the voting rights attaching to such shares unlessotherwise provided by law or by the Articles of Association
or if, in the case of a usufruct, the shareholder has granted
voting rights to the usufructuary. Pursuant to the Articles of
Association and subject to the prior consent of the Board of
Directors, a pledgee of shares in the Company may be granted
the right to vote in respect of such pledged shares.
Article 25 (paragraph 2 and 3) of the Articles of Association
provides that “The right to vote can be granted to an
usufructuary. The right to vote can be granted to a pledgee,
but only with the prior consent of the Board of Directors.
No vote may be cast at the General Meeting of Shareholders
on a share that is held by the Company or a subsidiary;
nor for a share in respect of which one of them holds thedepositary receipts. Usufructuaries and pledgees of shares thatare held by the Company or its subsidiaries are, however, notexcluded from their voting rights, in case the right of usufruct orpledge was vested before the share was held by the Company
or its subsidiary.”

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3.1.11 Disclosure of Holdings
Pursuant to the WFT, any person who, directly or indirectly,
acquires or disposes of an interest in the capital or voting rights
of EADS must immediately give written notice to the AFM bymeans of a standard form, if, as a result of such acquisition or
disposal, the percentage of capital interest or voting rights heldby such person meets, exceeds or falls below the following
thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%,
75% and 95%. Any person whose interest in the capital or
voting rights of EADS meets, exceeds or falls below one orseveral of the above-mentioned thresholds due to a change in
EADS’ outstanding capital, or in voting rights attached to theshares as notiﬁed to the AFM by EADS, should notify the AFM
no later than the fourth trading day after the AFM has publishedthe notiﬁcation by EADS. Among other things, EADS is required
to notify the AFM immediately if its outstanding share capital or
voting rights have changed by 1% or more since the Company’s
previous notiﬁcation.
If at the end of a calendar year the composition of an investor’sholding differs from its previous disclosure as a result of theconversion of certain types of securities or following theexercise of rights to acquire voting rights, this investor must thenprovide an update of its previous disclosure within four weeksof the end of each calendar year by giving written notice thereof
to the AFM. The disclosures are published by the AFM on its
website (www.afm.nl). Pursuant to the Articles of Association,
shareholders must also notify the Company when crossing thethresholds above.
The Articles of Association also require that any person
acquiring directly or indirectly or with others with whom
it is acting in concert more than one tenth of the issued
share capital or voting rights of the Company must notify
the Company of its intentions (i) to buy or sell shares of theCompany in the following 12 months; (ii) to continue or to stop
acquiring shares or voting rights of the Company; (iii) to acquire
control of the Company; or (iv) to seek to designate a Memberof the Board of Directors of the Company. The Company will
provide the AFM with the information received in this context.
Failure to comply with the legal obligation to notify a change inshareholding under the WFT is a criminal offence punishable
by criminal and administrative penalties as well as civil law
penalties, including the suspension of voting rights.

Disclosure Requirements for Membersof the Board of Directors and the Executive
Committee
Disclosure of holdings
In addition to the requirements under the WFT regarding thedisclosure of holdings in case the speciﬁed thresholds are met
or exceeded or if holdings fall below these thresholds, Membersof the Board of Directors must report to the AFM the numberof shares in EADS and attached voting rights (1) held by him
or an entity controlled by him, within two weeks following his
appointment as Director, whether or not such shareholdings
meet or exceed any of the speciﬁed thresholds. Subsequently,
any Member of the Board of Directors is required to notify the
AFM of any changes in such number of shares in EADS andattached voting rights.

Disclosure of transactions carried out
on any securities issued by the Company
Based on Section 5:60 of the WFT, certain persons discharging
managerial responsibilities within the Company and, whereapplicable, persons closely associated with them (together“Insiders”, as deﬁned below), are required to notify the AFM
within ﬁve trading days of all transactions conducted for theirown account involving shares of the Company, or derivatives
or other ﬁnancial instruments related to such shares, unlessthe aggregate amount of such transactions does not exceed€ 5,000 in respect of all transactions in a calendar year.
“Insiders” for EADS include (i) Members of the Board of
Directors and the Executive Committee of the Company,(ii) persons closely associated with any person mentioned
under category (i) (including their spouses, dependent children
and other relatives who have shared the same household),and (iii) legal entities, trusts or partnerships whose managerial
responsibilities are discharged by any person referred to in
categories (i) or (ii) or which are directly or indirectly controlled
by such a person, or that have been set up for the beneﬁt ofsuch a person, or whose economic interests are substantiallyequivalent to those of such a person.
EADS has adopted speciﬁc internal insider trading rules (the“Insider Trading Rules”) in order to ensure compliance withthe above requirements and with other share trading regulations
applicable in the Netherlands, France, Germany and Spain. The
Insider Trading Rules are available on the Company’s website,and provide that: (i) all employees and Directors are prohibitedfrom conducting transactions in EADS shares or stock options
if they have inside information, and (ii) certain persons are
only allowed to trade in EADS shares or stock options withinvery limited periods and have speciﬁc information obligations
to the ITR Compliance Ofﬁcer of the Company and thecompetent ﬁnancial market authorities with respect to certaintransactions. The ITR Compliance Ofﬁcer is responsible for the
implementation of the Insider Trading Rules and for reporting to
the AFM.
Pursuant to section 5:59 paragraph of the WFT, the Company
must maintain a list of all persons working for it by virtue ofa labour relationship or otherwise, who may have access to
inside information. Equivalent requirements exist under French,
German and Spanish law.

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

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According to paragraph 15a of the German Securities Trading
Act, persons with signiﬁcant managerial responsibility within the
Company (i.e. for EADS, the Members of the Board of Directors
and of the Executive Committee), or the persons closely
associated with them, must disclose transactions conducted fortheir own account involving shares of the Company or ﬁnancial
instruments that relate to those shares, especially derivatives.
These persons have to notify the Company and the German

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Federal Financial Supervisory Authority of the transactions
within ﬁve trading days unless the aggregate amount ofsuch transactions does not exceed € 5,000 in respect of alltransactions in a calendar year. Since implementation of theTransparency Directive into German law on 20 January 2007,
EADS is no longer required to publish such notiﬁcations on
its website or in a German supra-regional mandatory stock
exchange newspaper.

3.1.12 Mandatory Offers
3.1.12.1 Takeover Directive
The Directive 2004/25/EC on takeover bids (the “Takeover
Directive”) sets forth the principles governing the allocation oflaws applicable to EADS in the context of a takeover bid for theshares of the Company. The Takeover Directive refers to therules of the Netherlands and the rules of the European Union
Member State of the competent authority that must be chosen
by EADS from among the various market authorities supervising
the markets where its shares are listed.
For EADS, matters relating to, inter alia, the consideration
offered in the case of a bid, in particular the price, and mattersrelating to the bid procedure, in particular the information on
the offeror’s decision to make a bid, the contents of the offer
document and the disclosure of the bid, shall be determinedby the laws of the European Union Member State having thecompetent authority, which will be selected by EADS at a futuredate.
Matters relating to the information to be provided to theemployees of EADS and matters relating to company law, inparticular the percentage of voting rights which confers control
and any derogation from the obligation to launch a bid, theconditions under which the Board of Directors of EADS mayundertake any action which might result in the frustration of
the bid, the applicable rules and the competent authority will
be governed by Dutch law (see “— 3.1.12.2 Dutch Law” and“— 3.1.12.3 Articles of Association”). Dutch law also contains
provisions on the consideration offered, in particular the priceand determination of a fair price by the Enterprise Chamber ofthe Amsterdam Court of Appeals at the request of the bidder,
the target company or any holder of shares.

3.1.12.2 Dutch Law
The bill implementing the Takeover Directive (the “TakeoverAct”) in Dutch Law entered into force on 28 October 2007. In
accordance with the Takeover Act, shareholders are required tomake an unconditional public offer for all issued and outstanding
shares in the Company’s share capital if they – individually or
acting in concert (as such term is deﬁned below), directly or
indirectly – have 30% or more of the voting rights (signiﬁcant
control) in the Company. In addition to the other available
exemptions listed below, the requirement to make a public offer
does not apply to persons, who at the time the Takeover Act
came into force, already held – individually or acting in concert –30% or more of the voting rights in the Company.
98 I EADS REGISTRATION DOCUMENT 2011

Under the Takeover Act, natural persons, legal entities orcompanies are “acting in concert” if they cooperate on thebasis of an agreement with the objective to acquire signiﬁcant
control (as deﬁned above) in the target company, or if they
cooperate with the target company with the objective to preventthe success of an announced public offer for the shares in suchtarget company. The following categories of natural persons,legal entities or companies are deemed to be “acting in concert”
under the Takeover Act: (i) legal entities or companies that forma group of companies as deﬁned in section 2:24b of the Dutch
Civil Code, (ii) legal entities or companies and their subsidiaries,and (iii) natural persons and their subsidiary companies.
In addition to the exemption stated above, the obligation to
make a public offer does not apply to the natural person, legal
entity or company that, amongst others:
O acquires significant control as a result of declaring
unconditional (gestand doen) a public offer made for all
shares (or depositary receipts) in the target company;
O is a legal entity, independent from the target company, that
acquires significant control after a public offer has beenannounced by a third party, provided that such entity (i) holds
the shares in the target company for a maximum periodof two years and for purposes of protection of the target
company and (ii) the corporate objects of such entity are topreserve the interests of the target company;
O is a legal entity, independent from the target company, which
has issued depositary receipts for the shares in the target
company;
O acquires significant control as a result of: (i) an intra-grouptransfer of the shares representing significant control; or (ii) atransfer between a parent company and its subsidiary;
O acquires significant control acting in concert with one ormore other natural persons, legal entities or companies,in which case the obligation to make a public offer lies
with the natural person, legal entity or company that can
exercise most of the voting rights in the General Meeting of
Shareholders of the target company; andO acts as a custodian (if and to the extent it cannot exercise
any voting rights in its sole discretion).

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GENERAL DESCRIPTION OF THE COMPANY

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The obligation to make a public offer also does not apply if:
O the natural person, legal entity or company, after acquiring
significant control, loses such control within a thirty day
grace period, unless (i) loss of control is due to a transfer toa natural person, legal entity or company to which one of the
exemptions set out above applies, or (ii) the acquirer of thesignificant control has exercised its voting rights during thisthirty day period; orO the target company’s General Meeting of Shareholders
agrees upfront with the acquisition of significant control – andany subsequent acquisition of shares – by a third party with
95% of votes cast in favour of such proposal, excluding any
votes by such third party and any of its concert parties.
Under the Takeover Act, a minority shareholder may also
make a request for his shares to be purchased by an offeror
who holds at least 95% of the issued share capital and thevoting rights. This claim must be brought before the Enterprise
Chamber of the Court of Appeals in Amsterdam within thethree-month period after the closing of the acceptance periodof the public offer.

3.1.12.3 Articles of Association
Without prejudice to the provisions of the Takeover Act as set
out in section — 3.1.12.2 above, the Company’s Articles of
Association contain a number of provisions that could also
trigger the requirement to make a public offer for the shares in
the Company.
Pursuant to Article 15 of the Articles of Association, in the eventthat a direct or indirect acquisition of shares in the Company
results in a person acting alone or in concert (as set out in
Section 5:45 of the WFT) holding shares or voting rights where
the control over the number of shares or votes reaches orexceeds 33 1/3% of the issued share capital of the Company
then such person(s) is (are) required to make an unconditional
public offer to all shareholders to acquire all of their shares or
to procure that such an offer is made. Such offer must comply
with all of the applicable regulatory or other legal requirementsin each jurisdiction in which the Company’s shares are listed.
Pursuant to Article 16 of the Articles of Association, in theevent of a failure to launch such an offer (or if the offer does
not satisfy the relevant legal or regulatory requirements ineach of the jurisdictions where the Company’s shares arelisted) within two months after notiﬁcation to the Company ofshareholdings reaching or exceeding 33 1/3% or failing suchnotiﬁcation, within a period of 15 days of receipt of notice fromthe Board of Directors conﬁrming the obligation to make thepublic offer, then any person(s) who is (are) required to makethe offer shall within the period speciﬁed by the notice sentby the Board of Directors exchange for depositary receipts
to be issued by the Stichting Administratiekantoor EADS (the“Foundation”), such percentage of shares they hold over and

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above the 33 1/3% of the shares issued by the Company (the“Excess Percentage”). From the date speciﬁed in the noticesent by the Board of Directors, the right to attend meetings, tovote and to receive dividends shall be suspended in respectof the Excess Percentage. If, within a period of 14 days from afurther notice from the Board of Directors, the person required
to exchange his shares representing his Excess Percentage fordepositary receipts still has not done so, then the Company isirrevocably authorised to exchange such shares for depositary
receipts issued by the Foundation. The constitutive documentsof the Foundation provide that the Foundation shall not havethe right to attend shareholders’ meetings of the Company asa shareholder, to speak at such meetings and to exercise thevoting rights attached to the shares it holds, except if, in theview of the Board of Directors of the Foundation, such action isrequired for the performance of the mandatory offer provisions
in the Articles of Association.
Pursuant to Article 17 of the Articles of Association, theobligation to make a public offer does not apply in the following
situations:
O to a transfer of shares to the Company itself or to theFoundation;
O to a securities custody, clearing or settlement institution
acting in that capacity, provided that the provisions ofArticle 16 of the Articles of Association described above shallbe applicable where shares are held for persons acting inbreach of the provisions of Articles 15 and 16 of the Articles
of Association described above;
O to a transfer of shares by the Company or to an issue ofshares by the Company on a merger or on an acquisition by
the Company of another company or business;
O to a transfer of shares from one party to another party who isa party to an agreement as envisaged in the WMZ to define“concert parties” where the agreement is entered into before
31 December 2000 (as amended, supplemented or replaced
by a new agreement by the admission of one or more newparties or the exclusion of one or more parties), except that
this exemption will not apply to a new party that individuallyor with its subsidiaries and/or group companies holds atleast 33 1/3% of the control over shares or votes in the
Company; this exemption is intended to exclude the parties
to the Participation Agreement (See “— 3.3.2 Relationships
with Principal Shareholders”) (as amended, supplemented
or replaced by a new agreement by the admission of one ormore new parties or the exclusion of one or more parties)
from the obligation to make the mandatory offer in the eventof a transfer of shares between themselves; orO to a transfer by a shareholder to a subsidiary in which it holds
more than 50% or by a shareholder to a company whichholds more than 50% in such transferring shareholder.

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3.2 General Description of the Share Capital
3.2.1 Issued Share Capital
As of 31 December 2011, the Company’s issued share capital amounted to € 820,482,291, consisting of 820,482,291 fully paid-up
shares of a nominal value of € 1.0 each.

3.2.2 Authorised Share Capital
As of 31 December 2011, the Company’s authorised share capital amounted to € 3 billion, consisting of 3,000,000,000 sharesof € 1.0 each.

3.2.3 Modiﬁcation of Share Capital or Rights Attached to the Shares
Unless such right is limited or eliminated by the shareholders’meeting as described below, holders of shares have a
pre-emptive right to subscribe for any newly issued sharespro rata to the aggregate nominal value of shares held by them,
except for shares issued for consideration other than cash andshares issued to employees of the Company or of a Group
company. For the contractual position as to pre-emption rights,
see “— 3.3.2 Relationships with Principal Shareholders”.
The shareholders’ meeting has the power to issue shares.
The shareholders’ meeting may also authorise the Board of
Directors for a period of no more than ﬁve years, to issue sharesand to determine the terms and conditions of share issuances.
The shareholders’ meeting also has the power to limit or to
exclude pre-emption rights in connection with new issues ofshares, and may authorise the Board of Directors for a periodof 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 in the case where less than half of the capital issued ispresent or represented at said meeting.
Pursuant to the shareholders’ resolution adopted at the Annual
General Meeting of Shareholders held on 26 May 2011, theBoard of Directors was granted powers (i) to issue shares andto grant rights to subscribe for shares which are part of EADS’
authorised share capital, provided that such powers shall belimited to 0.15% of the Company’s authorised share capital fromtime to time and (ii) to limit or exclude preferential subscription
rights, in both cases for a period expiring at the Annual General
Meeting of Shareholders to be held in 2012. Shareholders will
be asked to renew this authority at this meeting.
The shareholders’ meeting may reduce the issued share capitalby cancellation of shares or by reducing the nominal valueof the shares by means of an amendment to the Articles of
Association, the latter requiring the approval by a two-thirds
majority of the votes cast during the shareholders’ meeting.

3.2.4 Securities Granting Access to the Company’s Share Capital
Except for stock options granted for the subscription of EADS shares (See “Corporate Governance — 4.3.3 Long-Term Incentive
Plans”), there are no securities that give access, immediately or over time, to the share capital of EADS.
The table below shows the total potential dilution that would occur if all the stock options issued as of 31 December 2011 were exercised:
Number of shares % of diluted capital Number of voting rights % of diluted voting rights (1)Total number of EADS shares issued
as of 31 December 2011
Total number of EADS shares which may be
issued following exercise of stock options
Total potential EADS share capital

820,482,291

97.9%

816,812,499

97.9%

17,468,709

2.1%

17,468,709

2.1%

837,951,000

100%

834,281,208

100%(1) The potential dilutive effect on capital and voting rights of the exercise of these stock options may be limited as a result of the Company’s share purchase programmes and in thecase of subsequent cancellation of repurchased shares. See “— 3.3.7.1 Dutch law and information on share repurchase programmes”.

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3.2.5 Changes in the Issued Share Capital since Incorporation of the Company

Date

Nature of Transaction

29 December 1998 Incorporation
3 April 2000

Conversion into €Issue of shares in exchange for contributions
8 July 2000
by Aerospatiale Matra, DASA AG and SEPI
Issue of shares for the purpose of the initial public
13 July 2000
offering and listing of the Company
Issue of shares for the purpose of the employee offering
carried out in the context of the initial public offering and
21 September 2000 listing of the Company
Issue of shares for the purpose of an employee
offering (note d’opération approved by the COB (2)5 December 2001 on 13 October 2001 under number 01-1209)
Issue of shares for the purpose of an employee offering(note d’opération approved by the COB on 11 October
4 December 2002 2002 under number 02-1081)
Issue of shares for the purpose of an employee
offering (note d’opération approved by the COB
5 December 2003 on 25 September 2003 under number 03-836)
Cancellation of shares upon authorisation granted by
20 July 2004
the Annual Shareholders’ Meeting held on 6 May 2004
Issue of shares for the purpose of an employee
offering (note d’opération approved by the AMF
3 December 2004 on 10 September 2004 under number 04-755)
Issue of shares following exercise of options granted
In 2004
to employees (3)Cancellation of shares upon authorisation granted by
25 July 2005
the Annual Shareholders’ Meeting held on 11 May 2005
Issue of shares for the purpose of an employee offering(note d’opération approved by the AMF on 4 May 2005
29 July 2005
under number 05-353)
Issue of shares following exercise of options granted
In 2005
to employees (3)Cancellation of shares upon authorisation granted by
20 July 2006
the Annual Shareholders’ Meeting held on 4 May 2006
Issue of shares following exercise of options granted
In 2006
to employees (3)Cancellation of shares upon authorisation granted by
In 2007
the Annual Shareholders’ Meeting held on 4 May 2007

Nominalvalue pershare

Numberof shares
issued/cancelled

Total number
of issued
shares after
Premium (1) transaction

Total issued
capital after
transaction

NLG 1,000

100

-

100

NLG 100,000€1

50,000-50,000€ 50,000€ 1,511,477,044 715,053,828€ 715,053,828€ 1 715,003,828€1

80,334,580 € 1,365,687,860 795,388,408 € 795,388,408€1

11,769,259

807,157,667€ 807,157,667€1

2,017,894 € 19,573,571.80 809,175,561€ 809,175,561€1

2,022,939 € 14,470,149.33

811,198,500€ 811,198,500€11,686,682 € 19,363,109.36 812,885,182€ 812,885,182€1

5,686,682- 807,198,500€ 807,198,500€12,017,822€ 34,302,974 809,216,322€ 809,216,322€1

362,747€ 6,133,436 809,579,069€ 809,579,069€1

1,336,358- 808,242,711€ 808,242,711€1

1,938,309 € 34,618,198.74

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

817,743,130€ 817,743,130€1

6,656,970-

811,086,160€ 811,086,160€1

4,845,364€ 89,624,589 815,931,524€ 815,931,524€ 168,300,403€1

4,568,405-

811,363,119€ 811,363,119

Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted
to employees (3)Cancellation of shares upon authorisation granted by
the Annual Shareholders’ Meeting held on 26 May 2008

€1

2,037,835€ 33,482,173 813,400,954€ 813,400,954€1

613,519€ 9,438,683

814,014,473€ 814,014,473€1

1,291,381- 812,723,092€ 812,723,092

Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted
to employees (3)Cancellation of shares upon authorisation granted by
the Annual Shareholders’ Meeting held on 27 May 2009€1

2,031,820€1

14,200€ 208,030 814,769,112€ 814,769,112€1

22,987- 814,746,125€ 814,746,125

18 December 2009 Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted
In 2010to employees (3)€11,358,936€1

297,661€ 4,477,168 816,402,722 € 816,402,722

29 July 2011

€1

2,445,527€ 34,602,580 818,848,249 € 818,848,249€1

78,850- 818,769,399 € 818,769,399€1

1,712,892€ 25,995,005 820,482,291 € 820,482,291

9 May 2007
In 2007
In 2008
25 July 2008
In 2008
31 July 20099 August 2011
In 2011

Issue of shares for the purpose of an employee offering
Cancellation of shares upon authorisation granted by
the Annual Shareholders’ Meeting held on 26 May 2011
Issue of shares following exercise of options granted
to employees (3)€ 22,084,500 814,754,912 € 814,754,912€ 13,263,215 816,105,061 € 816,105,061(1) The costs (net of taxes) related to the initial public offering of the shares of the Company in July 2000 have been offset against share premium for an amount of € 55,849,772.
(2) Predecessor of the AMF.
(3) For information on stock option plans under which these options were granted to EADS employees, see “Corporate Governance — 4.3.3 Long-Term Incentive Plans”.

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3.3 Shareholdings and Voting Rights
3.3.1 Shareholding Structure
EADS combined the activities of Aerospatiale Matra(“Aerospatiale Matra” or “ASM”), Daimler Aerospace AG(“DASA AG”) (with the exception of certain assets and liabilities)
and Construcciones Aeronáuticas SA (“CASA”) pursuant to aseries of transactions completed in July 2000.

The term “Indirect EADS Shares” relates to the EADS shares
held by Daimler AG (“Daimler”), SEPI and Société de Gestion
de l’Aéronautique, de la Défense et de l’Espace (“Sogeade”),
for which EADS Participations B.V. exercises all the attachedvoting rights, as well as, for Lagardère SCA (“Lagardère”) and
Société de Gestion de Participations Aéronautiques (“Sogepa”),
or the companies of their group, the number of EADS shares
held indirectly via Sogeade, reﬂecting by transparency, theirrespective interest in Sogeade.

As of 31 December 2011, 22.35% of EADS’ share capital washeld by DASA AG, which is a 66.67% subsidiary of Daimler
Luft- und Raumfahrt Holding AG (“DLRH”), a wholly owned
subsidiary of Daimler. The remaining 33.33% of DASA AG is
held by a consortium of private and public-sector investors.
Sogeade, a French partnership limited by shares (société
en commandite par actions) whose share capital, as of
31 December 2011, is held 66.67% by Sogepa (a French stateholding company) and 33.33% by Désirade (a French société
par actions simplifiée wholly owned by Lagardère), held 22.35%
of EADS’ share capital. Thus, 44.70% of EADS’ share capital
was held by Daimler and Sogeade who jointly control EADS
through a Dutch law contractual partnership managed by EADSParticipations B.V. (the “Contractual Partnership”). SEPI,
which is a party to the Contractual Partnership, held 5.45% of
EADS’ share capital. The public (including EADS employees)
and the Company held, respectively, 49.35% and 0.45% of
EADS’ share capital. The République française (the “French
State”) directly held 0.06% of EADS’ share capital, suchshareholding being subject to certain speciﬁc provisions.

Unless the context requires otherwise, the shareholdingsof DASA AG in EADS are referred to in this document asshareholdings of Daimler, and the rights and obligations of
DASA AG pursuant to the agreements described herein arereferred to as rights and obligations of Daimler.

The diagram below shows the ownership structure of EADS
as of 31 December 2011 (% of capital and of voting rights (inparentheses) before exercise of outstanding stock options
granted for the subscription of EADS shares). See “Corporate
Governance — 4.3.3 Long-Term Incentive Plans”.

In this document, the term “Completion” relates to theJuly 2000 completion of the contributions made by Aerospatiale
Matra, DASA AG and Sociedad Estatal de Participaciones
Industriales (“SEPI”) (a Spanish state holding company) to EADS
to combine such activities into EADS.

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Ownership Structure of EADS as of 31 December 2011

French StateSOGEPA

Spanish State

Lagardère

Daimler

100%

100%

Private and public sector investors

Désirade

33.33%
66.67%

DLRH

100%

66.67%
33.33%

Sogeade(Managed by
Sogeade Gérance)

SEPI

Dasa

22.35%

5.45%

22.35%(22.45%)(5.47%)(22.45%)Contractual partnership(Managed by EADS Participations B.V.)

50.14%(50.36%)(1)

0.06%(0.06%)(2)(3)

EADS N.V.

49.35%(49.58%)Public0.45%(-)(4)(1) EADS Participations B.V. exercises the voting rights attached to these EADS shares pledged by Sogeade, Daimler and SEPI who retain title to their respective shares.
(2) The French State exercises the voting rights attached to these EADS shares (such shares being placed with the Caisse des Dépôts) in the same way that EADS Participations B.V.
exercises the voting rights pooled in the Contractual Partnership.
(3) Shares held by the French State following the distribution without payment of consideration to certain former shareholders of Aerospatiale Matra as a result of its privatisationin June 1999. All the shares currently held by the French State will have to be sold on the market.
(4) As of 31 December 2011, the Company holds, directly or indirectly through another company in which the Company holds directly or indirectly more than 50% of the sharecapital, 3,669,792 of its own shares. The EADS shares owned by the Company itself do not carry voting rights.

For the number of shares and voting rights held by Membersof the Board of Directors and Executive Committee, see“Corporate Governance — 4.2.1 Compensation Granted to
Directors and Principal Executive Ofﬁcers”.

Approximately 3.7% of the share capital (and voting rights) are
held by EADS employees as of 31 December 2011.

3.3.2 Relationships with Principal Shareholders
The principal agreements governing the relationships between
the founders of EADS are an agreement (the “Participation
Agreement”) entered into on Completion between Daimler,
DASA AG, Lagardère, Sogepa, Sogeade and SEPI, and a
Dutch law Contractual Partnership agreement entered into
on Completion between Sogeade, DASA AG, SEPI andEADS Participations B.V. (the “Contractual Partnership

Agreement”), which repeats certain terms of the Participation
Agreement and a certain number of other agreements(in particular, a shareholder agreement (the “Sogeade
Shareholders’ Agreement”) entered into on Completion
between Sogepa and Lagardère and an agreement between
the French State, Daimler and DLRH). EADS Participations B.V.
is a Dutch private company with limited liability (besloten

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vennootschap met beperkte aansprakelijkheid) and is the
managing partner of the Contractual Partnership. The Indirect
EADS Shares held by Daimler, Sogeade and SEPI have been
pledged to EADS Participations B.V., which has been granted
the exclusive power to exercise the voting rights attached tothe pledged shares (including the right to attend and speak atshareholders’ meetings) in accordance with the ContractualPartnership Agreement.
The agreements above contain, among other things, provisions
relating to the following matters:
O the composition of the boards of Directors of EADS,EADS Participations B.V. and Sogeade Gérance (gérant
commandité of Sogeade);
O restrictions on the transfer of EADS shares and Sogeade
shares;O pre-emptive and tag-along rights of Daimler, Sogeade,
Sogepa and Lagardère;
O defences against hostile third parties;
O consequences of a change of control of Daimler, Sogeade,
Lagardère, Sogepa or SEPI;O a put option granted by Sogeade to Daimler over its EADS
shares in certain circumstances;O specific rights of the French State in relation to certain
strategic decisions, regarding among other issues, EADS’ballistic missiles activity; andO certain limitations on the extent of the French State’sownership of EADS.
Further details on the agreements among the principal
shareholders of EADS are set out below.

Organisation of EADS Participations B.V.
The Board of Directors of EADS Participations B.V. has an equal
number of Directors nominated by Daimler and by Sogeade,respectively (taking into account proposals made by Lagardère
in respect of the Sogeade-nominated Directors). Daimler andSogeade each nominate two Directors, unless otherwise
agreed, and the Daimler-Directors and the Sogeade-Directors
jointly have the right to nominate and to remove the Chairman
and the Chief Executive Ofﬁcer. In addition, SEPI has the rightto nominate a Director, as long as the shareholding of SEPI in
EADS is 5% or more but in any case until the Annual General
Meeting of Shareholders to be held in 2012. The Chairman
shall either have French or German nationality and the Chief
Executive Ofﬁcer shall have the other nationality.
This structure gives Daimler and Sogeade equal nominatingrights in respect of the majority of the Directors of the decisionmaking body of EADS Participations B.V. All decisions of EADSParticipations B.V.’s Board of Directors shall require the vote infavour of at least four Directors, including the vote in favour of
all Sogeade-Directors and all Daimler-Directors. The quorum fortransacting any business at a meeting of the Board of Directorsof EADS Participations B.V. is one Sogeade Director and one
Daimler Director being present.
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Transfer of EADS Shares
Daimler, Sogeade, SEPI, Lagardère and Sogepa each havethe right to sell its EADS shares on the market, subject to thefollowing conditions:
O if a party wishes to sell any EADS shares, it shall first sell its
shares other than its Indirect EADS Shares before exercising
its right to sell its Indirect EADS Shares in accordance withthe provisions set out below;
O on the sale of Indirect EADS Shares, Daimler (in the case of asale by Sogeade), Sogeade (in the case of a sale by Daimler)or Sogeade and Daimler (in the case of a sale by SEPI) may
either exercise a pre-emption right or sell their respective
Indirect EADS Shares on the market in the same proportions
as the respective Indirect EADS Shares of the relevant parties
bear to each other;
O any transfer of Indirect EADS Shares by either Sogepa or
Lagardère is subject to a pre-emption right in favour of
Lagardère or Sogepa, as the case may be. In the event thatsuch pre-emption right is not exercised, the Indirect EADS
Shares may be sold (a) to an identified third party subject toLagardère’s or Sogepa’s consent (as the case may be) and also
to Daimler’s consent and (b) if such consent is not obtained, theIndirect EADS Shares may be sold on the market, subject toDaimler’s pre-emption right referred to above;
O Lagardère and Sogepa shall each have a proportional right totag-along on a sale of its Indirect EADS Shares; andO the pre-emption and tag-along rights of Lagardère andSogepa referred to above do not apply to a transfer of EADS
shares directly held by one of them.
Any sale on the market of EADS shares in accordance with
the Participation Agreement shall be conducted in an orderly
manner so as to ensure the least possible disruption to themarket of EADS shares. To this effect, the parties shall consult
with each other before any such sale.

Control of EADSIn the event that a third party to which Daimler or Sogeade
objects (a “Hostile Third Party”) has a direct or indirect interest
in EADS shares equal to 12.5% or more of the number of such
EADS shares the voting rights of which are pooled through theContractual Partnership (a “Qualifying Interest”), then, unlessa Hostile Offer (as deﬁned below) has been made by the Hostile
Third Party or until such time as Daimler and Sogeade agree
that the Hostile Third Party should no longer be considered a
Hostile Third Party or the Hostile Third Party no longer holds a
Qualifying Interest, the parties to the Participation Agreement
shall exercise all means of control and inﬂuence in relation to
EADS to avoid such Hostile Third Party increasing its rights or
powers in relation to EADS.
The parties to the Participation Agreement may accept an offer(whether by way of tender offer or otherwise) by a Hostile Third
Party which is not acceptable to either Daimler or Sogeade (a“Hostile Offer”), subject to provisions requiring, inter alia, theparty wishing to accept, to ﬁrst offer its EADS shares to Daimler

GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITALSHAREHOLDINGS AND VOTING RIGHTS

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and/or Sogeade, in which case Daimler and/or Sogeade may
exercise their pre-emption rights in respect of some or all of the
EADS shares held by the party wishing to accept the Hostile Offer.
Any sale of EADS shares, other than the EADS Indirect Shares,
by Daimler, Sogeade or Lagardère, at a time when a Hostile
Third Party is a shareholder and purchaser of EADS shareson the market, is subject to the pre-emption right of Sogeade,
Daimler and Sogepa respectively. In the case of a sale by
Lagardère, if Sogepa does not exercise its right of pre-emption,
Daimler has in turn a pre-emption right.

Dissolution of Contractual Partnershipand EADS Participations B.V.
The Contractual Partnership and EADS Participations B.V. will
be dissolved and wound up upon the occurrence of certain
events (each, a “Termination Event”) including:(i)if the proportion which the Indirect EADS Shares of either Daimler
or Sogeade bears to the total number of EADS shares is lessthan 10%, unless the difference between the holdings of Daimler
and Sogeade (calculated as a percentage by reference to thenumber of Indirect EADS Shares held by each of them as against
the total number of EADS shares) is 5% or less, in which casethe dissolution and winding up shall only occur if the proportion
which the Indirect EADS Shares of Daimler or Sogeade bears
to the total number of EADS shares is 5% or less; or(ii) if, on a change of control of either Lagardère, Sogepa,
Sogeade or Daimler, no notice of an offer by a third party topurchase the Sogeade shares or the Indirect EADS Shares
held by the party undergoing the change of control (the“Changed Party”) (which offer the Changed Party wishes to
accept) has been served in accordance with the Participation
Agreement (see below “Change of Control”) within 12 monthsof the date of the change of control occurring (the absenceof notice of an offer by a third party to purchase the Indirect
EADS Shares held by SEPI upon a change of control of SEPI
does not trigger a dissolution of the Contractual Partnershipor EADS Participations B.V. but shall cause SEPI to lose its
main rights or liabilities under the Participation Agreement or
the Contractual Partnership Agreement).
On the occurrence of a Termination Event, EADSParticipations B.V. is prohibited from conducting further
business except as is necessary to its liquidation or theliquidation of the Contractual Partnership.

Change of Control
The Participation Agreement provides, inter alia, that if(a) Lagardère or Sogepa undergoes a change of control andDaimler so elects, (b) Sogeade undergoes a change of control
and Daimler so elects, (c) Daimler undergoes a change ofcontrol and Sogeade so elects, (d) SEPI undergoes a change ofcontrol and Sogeade or Daimler so elects then:(i)the party undergoing the change of control shall use its
reasonable efforts to procure the sale of its Sogeade interest(if the party undergoing the change of control is Lagardère

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or Sogepa) or of its Indirect EADS Shares (if the party
undergoing the change of control is Daimler, Sogeade or
SEPI) to a third party purchaser on bona fide arm’s length
terms. When the party subject to the change of control is
Lagardère or Sogepa, the third party purchaser shall be
nominated with Daimler’s consent, not to be unreasonably
withheld; and(ii) in the event that a third party offers to purchase the Sogeadeinterest held by Lagardère or Sogepa or the Indirect EADS
Shares held by Daimler, Sogeade or SEPI as the case may be,
is received and the party undergoing the change of control
wishes to accept that offer, such offer shall immediately
be notified to (a) Daimler in the case of a change of control
occurring to Lagardère or Sogepa, (b) Sogeade in the caseof the change of control occurring to Daimler, (c) Daimler inthe case of the change of control occurring to Sogeade, or(d) Daimler or Sogeade in the case of the change of control
occurring to SEPI (the party notified under (a), (b), (c) or (d)being the “Non-Changed Party”). The Non-Changed Party
shall have a first right to purchase the Sogeade interest or
the Indirect EADS shares being offered for sale at the pricebeing offered by the third party. In relation to (d), if Daimler
and Sogeade have both elected that SEPI procure a third
party purchaser, then they shall each have the right to acquire
SEPI’s Indirect EADS Shares in the respective proportions
which the number of their EADS shares bear to one anotherat that time. In the event that the Non-Changed Party does
not give notice of its intention to purchase the Sogeadeinterest or the Indirect EADS Shares within 30 days of theoffer being made, then the Changed Party is obliged to sellsuch Sogeade interest or Indirect EADS Shares to the third
party on the terms of the third party’s original offer.
The third party purchaser may not be a competitor of EADS,
Sogeade or Daimler (as the case may be) nor a member of theGroup which has taken control of the Changed Party.

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

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Specific Rights and Undertakingsof the French StateThe French State, not being a party to the Participation
Agreement, entered into a separate agreement, governed by
French law, with Daimler and DLRH on 14 October 1999 (asamended) pursuant to which:
O the French State undertakes to hold an interest of no morethan 15% of the entire issued share capital of EADS throughSogepa, Sogeade and EADS Participations B.V.;
O the French State undertakes that neither it nor any of its
undertakings will hold any EADS shares directly; andO in each case disregarding (i) those EADS shares held by the
French State following the distribution without payment ofconsideration to certain former shareholders of Aerospatiale
Matra as a result of its privatisation in June 1999 and which
will have to be sold on the market; (ii) those shares held bySogepa or the French State which may be sold or acquired
pursuant to the Participation Agreement or the Sogeade
Shareholders’ Agreement (see below); and (iii) those shares
held for exclusively investment purposes.
Moreover, pursuant to an agreement entered into between
EADS and the French State (the “Ballistic Missiles
Agreement”), EADS has granted to the French State (a) a vetoright and subsequently a call option on the ballistic missiles
activity exercisable in the event that (i) a third party which is
not afﬁliated to the Daimler and/or Lagardère Groups acquires,directly or indirectly, either alone or in concert, more than 10%
or any multiple thereof of the share capital or voting rights
of EADS or (ii) the sale of the ballistic missiles assets or of
the shares of such companies carrying out such activity is
considered after the termination of the Sogeade Shareholders’
Agreement and (b) a right to oppose the transfer of any
such assets or shares during the duration of the Sogeade
Shareholders’ Agreement.

SogeadeSogeade is a French partnership limited by shares (société
en commandite par actions) the share capital of which is split
between Sogepa (66.67%) and Désirade, a French société
par actions simplifiée (33.33%). The share capital of Désirade
is itself wholly owned by Lagardère. Lagardère hence owns
indirectly 33.33% of Sogeade.
The general partner (associé commandité) of Sogeade,
Sogeade Gérance, is a French société par actions simplifiée
which is the manager of Sogeade and the share capital of whichis split equally between Sogepa and Lagardère SCA.
Sogeade Gérance’s Board of Directors consists of eight
Directors, four of them nominated by Lagardère (among whom
one shall be designated as the Chairman of the Board) and
four by Sogepa. Decisions of Sogeade Gérance’s Board shallbe approved by a simple majority of Directors except for thefollowing matters which require the approval of a qualiﬁed
majority of six of the eight Directors: (a) acquisitions ordivestments of shares or assets the individual value of which

106 I EADS REGISTRATION DOCUMENT 2011

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exceeds € 500 million; (b) agreements establishing strategic
alliances, or industrial or ﬁnancial co-operation; (c) a capitalincrease of EADS of more than € 500 million to which no
preferential right to subscribe for the shares is attached; (d) any
decision to divest or create a security interest over the assets
relating to prime contractor status, design, development andintegration of ballistic missiles or the majority shareholdingsin the companies Cilas, Sodern, Nuclétudes and the GIE
Cosyde (each a “Sogeade Reserved Matter”). The decisions
contemplated under (d) above are also governed by the
Ballistic Missiles Agreement (see above “Speciﬁc Rights andUndertakings of the French State”).
When a vote of Sogeade Gérance’s Board on such matters
does not reach the qualiﬁed majority of six Directors by reasonof any of the Sogepa-nominated Directors casting a negative
vote, the Sogeade-nominated Directors on the Board of EADSParticipations B.V. are obliged to vote against the proposal. Thismeans that the French State as the owner of Sogepa can vetoany decisions on these matters within EADS Participations B.V.
and in turn within EADS as long as the Sogeade Shareholders’
Agreement remains in existence.
In addition, in the case where the Board of Directors of EADSParticipations B.V. and/or the Board of Directors of EADS would
be called to address the following matters:(a) appointment/removal of the Chairman and the Chief Executive
Officer of EADS and appointment/removal of the Chief
Executive Officer of Airbus;(b) investments, projects, launch of new products or divestments
within the Group with an individual value/amount exceeding€ 500 million;(c) strategic and cooperation agreements;(d) modifications of the authorised share capital of EADS andincrease in the issued capital of EADS, with the exception ofcapital increases for the purposes of ESOP or other securities
issuances in favour of employees for an amount, per year or
per plan, less than 2% of the issued capital;(e) modifications of (1) the Articles of Association of EADS, (2) theinternal rules for the Board of Directors and (3) the internal
rules for the Executive Committee;(f) change of name, place of incorporation and nationality of
EADS; and(g) significant decisions in connection with the ballistic missiles
activities of EADS.
Sogeade Gérance’s Board shall previously meet to come to adecision on the appropriateness of any of the above-mentioned
matters. In this respect, the decision of Sogeade Gérance’s
Board shall be in writing and require the approval of a qualiﬁed
majority of six of the eight Directors; it being understood that
the Sogeade-nominated Directors on the Board of EADSParticipations B.V. shall in no event be bound by such decision.
Such procedure shall not apply in the case where the relevant

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matter will have been examined as a Sogeade Reserved Matterin accordance with the above.

The exercise price of the option will be calculated on the basisof an average market price for EADS shares.

The shareholding structure of Sogeade shall reﬂect at all times
the indirect interests of all the shareholders of Sogeade in
EADS.

In the event that Daimler exercises the put option granted
to it by Sogeade, Sogeade will acquire the EADS sharesfrom Daimler. However, Lagardère has the right to require
Sogepa to substitute itself for Sogeade in relation to theacquisition of Daimler’s EADS shares following the exercise
by Daimler of the put option. Such substitution right has been
accepted by Daimler. In the event that Lagardère does not
exercise such substitution right, Lagardère would have toprovide its pro rata part of the ﬁnancing necessary for suchacquisition. Sogepa undertakes to provide its pro rata part ofthe ﬁnancing corresponding to its rights in Sogeade. Should
Lagardère decide not to take part in the ﬁnancing, (a) Sogepa
undertakes to substitute itself for Sogeade to buy the shares
sold by Daimler as a result of the exercise of its put optionand (b) Sogepa or Lagardère may request the liquidation of
Sogeade and EADS Participations B.V. and the termination of
the Sogeade Shareholders’ Agreement (notwithstanding thetermination provisions of the Sogeade Shareholders’ Agreement
described under the paragraph “Sogeade” above). In that case,
Lagardère could freely sell its EADS shares on the market or ina block sale to a third party.

In certain circumstances, in particular in the event of a changeof control of Lagardère, Lagardère shall grant a call option overits Sogeade shares to any non-public third party designated by
Sogepa and approved by Daimler. This option may be exercised
during the term of the Sogeade Shareholders’ Agreement on
the basis of the market price for the EADS shares.
The Sogeade Shareholders’ Agreement shall terminate if
Lagardère or Sogepa ceases to hold at least 20% of the capitalof Sogeade, except that: (a) the provisions relating to the call
option granted by Lagardère described above shall remain
in force as long as the Participation Agreement is in force,(b) as long as Sogepa holds at least one Sogeade share, itwill remain entitled to nominate a Sogeade Gérance director
whose approval will be required with respect to any decision
to divest or create a security interest over the assets relating toprime contractor status, design, development and integrationof ballistic missiles activity or the majority shareholdings in thecompanies Cilas, Sodern, Nuclétudes and the GIE Cosyde; and(c) the Sogeade Shareholders’ Agreement will be terminated in
the event of a dissolution of EADS Participations B.V. caused
by Daimler. In the latter case, the parties have undertaken tonegotiate a new shareholders’ agreement in the spirit of theshareholders’ agreement between them dated 14 April 1999
relating to Aerospatiale Matra and with regard to their respective
shareholdings in Sogeade at the time of the dissolution of EADSParticipations B.V.

Pledge over EADS’ Shares Granted to EADSParticipations B.V.
Upon Completion and in order to secure their undertakings
under the Contractual Partnership Agreement and theParticipation Agreement, Sogeade, Daimler and SEPI granted
a pledge over their respective Indirect EADS Shares to EADSParticipations B.V. for the beneﬁt of EADS Participations B.V.
and the other parties to the Contractual Partnership Agreement.

Put Option
Under the Participation Agreement, Sogeade has granted
a put option to Daimler over its EADS shares which shall be
exercisable by Daimler, (i) in the event of a deadlock arising fromthe exercise by Sogepa of its rights relating to certain strategic
decisions (listed above under the description of Sogeade) otherthan those relating to the ballistic missiles activity or (ii) duringcertain periods provided that in both cases the French State
still holds any direct or indirect interest in EADS shares. The put
option may only be exercised in respect of all and not some onlyof Daimler’s EADS shares.

Other than the relationships between the Company and its
principal shareholders described above in this Section 3.3.2,
there are no potential conﬂicts of interest between the duties
to the Company of the Directors and their respective privateinterests or other duties.

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

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

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3.3.4 Changes in the Shareholding of the Company Since its Incorporation
The Company was founded with an authorised share capital of
500,000 Netherlands Guilders (“NLG”) divided into 500 shareseach having a nominal value of 1,000 NLG, of which 100 were
issued to Aerospatiale Matra on 29 December 1998. Theseshares were transferred to DASA AG by way of notarised
transfer certiﬁcate on 28 December 1999.
The changes in the shareholding of the Company since its initialpublic offering and listing are set forth below (for a descriptionof the changes in the issued share capital of the Company since
its incorporation, see “— 3.2.5 Changes in the Issued Share
Capital since Incorporation of the Company”).
Since July 2000, 4,293,746 EADS shares have been distributed
without payment of consideration by the French State to certain
former shareholders of Aerospatiale Matra as a result of its
privatisation in June 1999. The last distribution took place inJuly 2002.
In addition, in January 2001, the French State and Lagardère
sold on the market all of their EADS shares (respectively
7,500,000 and 16,709,333 EADS shares) other than their
Indirect EADS Shares (and, in the case of the French State,other than the EADS shares to be distributed to former
shareholders of Aerospatiale Matra, see “— 3.3.2 Relationships
with Principal Shareholders — Speciﬁc Rights and Undertakingsof the French State”) that they held as a result of the nonexercise of the over-allotment option granted to the underwriters
in the context of the initial public offering carried out by theCompany for the purpose of its listing in July 2000 (including,in the case of Lagardère, those shares other than its Indirect
EADS Shares purchased from the French Financial Institutions
at the end of the exercise period of the over-allotment option).
On 8 July 2004, Daimler announced that it had placed on themarket (in the context of a hedging transaction) all of its EADS
shares (22,227,478 EADS shares), representing 2.73% of thecapital and 2.78% of the EADS voting rights at that date, except
for its Indirect EADS Shares.
On 11 November 2005, DASA AG transferred its entire interest
in EADS to its wholly owned subsidiary DaimlerChrysler
Luft-und Raumfahrt Beteiligungs GmbH & Co. KG (“DC KG”).
However, in November 2006, DC KG then transferred its entire
interest in EADS back to DASA AG.
On 4 April 2006, Daimler and Lagardère announced the entry
into simultaneous transactions aimed at reducing by 7.5% each
their respective shareholdings in EADS. Daimler entered into
a forward sale agreement of approximately 61 million EADS
shares with a group of investment banks. Daimler indicatedthat it had lent these shares to the banks in anticipation of thesettlement of the forward sale. Lagardère issued mandatoryexchangeable bonds. The EADS shares deliverable at thematurity of the bonds represented a maximum of 7.5% of
the share capital of EADS, or approximately 61 million EADS
shares, and were delivered in three equal tranches representing
2.5% of the share capital of EADS. The ﬁrst two tranches weredelivered in June 2007 and June 2008, with delivery of the third

108 I EADS REGISTRATION DOCUMENT 2011

tranche brought forward from June 2009 to March 2009, as
discussed below.
On 8 September 2006, the Company was notiﬁed that JSC
Vneshtorgbank (formerly Bank of Foreign Trade) acquired
41,055,530 shares of EADS, representing 5.04% of the sharecapital of EADS at that date.
On 9 February 2007, Daimler reached an agreement with aconsortium of private and public-sector investors (“Dedalus”)
by which it effectively reduced its shareholding in EADS from
22.5% to 15%, while maintaining the balance of voting rights
between German and French shareholders. The Dedalus
consortium thereby acquired a 7.5% equity interest in EADS,
with Daimler continuing to control the voting rights of the entire
22.5% package of EADS shares. If this structure is dissolved,
Daimler has the right either to provide the investors with
EADS shares or to pay cash compensation. If EADS sharesare provided, the German State, and the French State andLagardère through Sogeade, will be entitled to pre-empt such
EADS shares. This transaction constitutes a speciﬁc exception
to the agreements described in “— 3.3.2 Relationships with
Principal Shareholders”.
On 26 December 2007, JSC Vneshtorgbank soldand transferred 41,055,530 EADS shares to the
Bank for Development and Foreign Economic Affairs(Vnesheconombank). EADS was notiﬁed of such transaction
thereafter.
On 26 January 2009, Lagardère and Natixis, the sole subscriber
to and sole holder of the outstanding mandatory exchangeablebonds issued by Lagardère in 2006, signed an amendment
to the subscription contract whereby they agreed, on theinitiative of Natixis, to bring forward the redemption date of
the mandatory exchangeable bonds – and consequently, thedelivery date of the third tranche of EADS shares – from 25 June2009 to 24 March 2009. Under the terms of this amendment,
Lagardère delivered 20,370,000 EADS shares, representing
2.5% of the capital and voting rights of EADS, to Natixis on
24 March 2009.
On 19 March 2010, Daimler and the Dedalus consortium ofprivate and public-sector investors conﬁrmed the continuationof the agreement reached on 9 February 2007 concerning
the equity interests and voting rights in EADS (as discussed
above). At Germany’s Federal Chancellery on 16 March 2010,
Daimler and the investors stated their willingness to maintain theexisting agreement without any changes. As a result, Daimler
continued to hold 22.5% of the voting rights in EADS while its
economic interest remained at 15%. Thus, the existing balanceof voting rights between German and French shareholders was
unchanged.
On 10 November 2011, Daimler announced that it had reached
an agreement in principle with the German federal governmentthat the state-owned KfW bank group would take over a 7.5%
equity interest in EADS from Daimler, with the sale slated totake place in 2012. Daimler also announced that it had agreed

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with the German government to hold conclusive discussions
in the near future about the long-term structure of the Dedalus
investor consortium, which was set up in 2007 and conﬁrmed in2010 (as discussed above). The consortium already holds 7.5%
of EADS, and Daimler has stated that the shared understandingis that the Dedalus investor consortium should fundamentallycontinue to exist.

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The voting rights of the Dedalus investor consortium would
remain with Daimler for the time being. As a result, after theplanned transfer of shares to KfW, Daimler would reduce its
economic interest in EADS to 7.5% and its voting rights to 15%.
The voting rights of Daimler and KfW would be pooled in anintermediate holding company.

The evolution in ownership of the share capital and voting rights of the Company over the past three years is set forth in the tablebelow:
Position as of 31 December 2011

Position as of 31 December 2010

Position as of 31 December 2009

Shareholders% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares

DASA AG22.35%

22.45%

183,337,704

22.46%

22.55%

183,337,704

22.46%

22.55%

183,337,704

Sogeade22.35%

22.45%

183,337,704

22.46%

22.55%

183,337,704

22.46%

22.55%

183,337,704

SEPI

5.45%

5.47%

44,690,871

5.47%

5.49%

44,690,871

5.48%

5.50%

44,690,871

50.14%

50.36%

411,366,279

50.39%

50.59%

411,366,279

50.40%

50.60%

411,366,279

Sub-total
ContractualPartnership
French State
Public (2)

(1)

0.06%

0.06%

502,746

0.06%

0.06%

502,746

0.06%

0.06%

502,74649.35%

49.58%

404,943,474

49.16%

49.35%

401,338,521

49.15%

49.34%

401,120,240-

3,115,796

Own sharebuy-back (3)

0.45%

-

3,669,792

0.39%

-

3,195,176

0.39%

Total

100%

100%

820,482,291

100%

100%

816,402,722

100%

100% 816,105,061(1) Shares held by the French State following the distribution without payment of consideration of 4,293,746 shares to certain former shareholders of Aerospatiale Matra as a resultof its privatisation in June 1999. All of the shares currently held by the French State will have to be sold on the market.
(2) Including EADS employees. As of 31 December 2011, EADS employees held approximately 3.7% of the share capital (and voting rights).
(3) The shares owned by the Company do not carry voting rights.

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

31 December 2011, resulted in the identiﬁcation of 1,345
shareholders holding a total of 365,471,908 EADS shares(including 5,162,966 shares held by Iberclear on behalf of the
Spanish markets and 32,906,252 shares held by Clearstream
on behalf of the German market).
The current shareholding structure of the Company is as shownin the diagram in “— 3.3.1 Shareholding Structure”.

3.3.5 Persons Exercising Control over the Company
See “— 3.3.1 Shareholding Structure” and “— 3.3.2 Relationships with Principal Shareholders”.

3.3.6 Simpliﬁed Group Structure Chart
The following chart illustrates the simpliﬁed organisational
structure of EADS as of 31 December 2011, comprising four
Divisions and the main Business Units. See “Information on

EADS’ Activities — 1.1.1 Overview — Organisation of EADSBusinesses”. For ease of presentation, certain intermediateholding companies have been omitted.

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110 I EADS REGISTRATION DOCUMENT 2011

100%

100%

46.32%

AirbusOperations
Ltd (UK)

AirbusOperations SL(Spain)

100%

100%

2.54%

97.46%

100%

100%

100%

100%

100%

100%

100%

100%

Astrium España
SL (Spain)

Astrium Ltd(UK)

Astrium Services
GmbH (Germany)

Astrium Services
UK Ltd (UK)

Astrium GmbH
(Germany)

Astrium Holding
SAS (France)

EADS Astrium NV(The Netherlands)

CRISA(Spain)EADS Casa
Espacio (Spain)

Paradigm
Services Lt(UK)

Paradigm Secure
Communications
Ltd (UK)

Infoterra Ltd
(UK)

100%

100%

100%

Eurocopter
España SA(Spain)Eurocopter UK
Ltd (UK)

Eurocopter
DeutschlandGmbH (Germany)

Eurocopter(SAS) (France)

95%

4

100%

100%

100%

100%

100%

Astrium SAS(France)

5%

EADS CASA
Holding (France)

EADS CASA(Spain)5

Indirect
DirectAirbusOperations
GmbH (Germany)

5.58%

100%

AirbusOperations SAS(France)100%

Airbus SAS(France)

EADS CASAFrance (France)

100%

100%

Eurocopter
Holding SAS(France)100%

4Sogerma

94.42%

EADS
North America

100%

3

North America

100%

100%
Premium
Aerotech GmbH
(Germany)

Aerolia

EFW

100%

EADS
DeutschlandGmbH (Germany)

100%

2

MBDA

EADS
Sogerma

MBDA SAS

37.50%CASSIDIAN SAS(France)

3.69%

96.31%EADS France
SAS (France)

100%

1

AirbusAstrium
Cassidian
Eurocopter

GIE ATR50%

EADS ATRDASSAULTAVIATIONCASSIDIAN Ltd
(U.K)

100%

(The Netherlands)

EADS N.V.

EADS Group Structure Chart
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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITALSHAREHOLDINGS AND VOTING RIGHTS

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3.3.7 Purchase by the Company of its Own Shares
3.3.7.1 Dutch Law and Information on Share
Repurchase Programmes
Pursuant to EC Regulation No. 2273/2003, the Company issubject to conditions for share repurchase programmes anddisclosure relating thereto, as described below.
Under Dutch Civil law, the Company may acquire its
own shares, subject to certain provisions of the law of
the Netherlands and the Articles of Association, if (i) the
shareholders’ equity less the payment required to make theacquisition does not fall below the sum of paid-up and called
portion of the share capital and any reserves required by thelaw of the Netherlands and (ii) the Company and its subsidiaries
would not thereafter hold or hold in pledge shares with anaggregate nominal value exceeding one-half (50%) of theCompany’s issued share capital. Share acquisitions may beeffected by the Board of Directors only if the shareholders ingeneral meeting have authorised the Board of Directors toeffect such repurchases. Such authorisation may apply for a
maximum period of 18 months.
Shares held by the Company do not carry voting rights.
Usufructuaries and pledgees of shares that are held by theCompany are, however, not excluded from their voting rights insuch cases where the right of usufruct or pledge was vested
before the share was held by the Company.
The Annual General Meeting of Shareholders held on 26 May
2011 authorised the Board of Directors, in a resolution that
renewed the previous authorisation given by the Annual General
Meeting of Shareholders held on 1 June 2010, for a period of
18 months from the date of such meeting, to repurchase sharesof the Company, by any means, including derivative products,
on any stock exchange or otherwise, as long as, upon such
repurchase, the Company will not hold more than 10% of theCompany’s issued share capital and at a price not less than thenominal value and not more than the higher of the price of thelast independent trade and the highest current independent bid
on the trading venues of the regulated market of the country inwhich the purchase is carried out.
A resolution will be submitted to the Annual General Meetingof Shareholders called for 31 May 2012 in order to renew
the authorisation given by the Annual General Meeting of
Shareholders held on 26 May 2011 and authorise the Board of
Directors, for a new period of 18 months as from the date ofsuch meeting, to repurchase shares of the Company, by anymeans, including derivative products, on any stock exchange
or otherwise, as long as, upon such repurchase, the Company

will not hold more than 10% of the Company’s issued sharecapital and at a price not less than the nominal value and not
more than the higher of the price of the last independent trade
and the highest current independent bid on the trading venuesof the regulated market of the country in which the purchase iscarried out.
As of the date of this document, the Company held 4,221,405 of
its own shares, representing 0.51% of its share capital.

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

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

3.3.7.4 Spanish Regulations
As a foreign issuer, the Company is not subject to Spanish
rules on trading in its own shares, which only apply to Spanish
issuers.
However, according to the Conduct Rules under the Spanish
Securities Act 24/1988 of 28 July 1988, the Company may nottrade in its own shares for the purpose of manipulating themarket.

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3.3.7.5 Description of the Share Repurchase
Programme to be Authorisedby the Annual General Meetingof Shareholders to be held on
31 May 2012
Pursuant to Articles 241-2-I and 241-3 of the AMF General
Regulations, below is a description of the share repurchaseprogramme (“descriptif du programme”) to be implemented by
the Company:
O date of the shareholders’ meeting to authorise the share
repurchase programme: 31 May 2012;
O intended use of the EADS shares held by the Company
as of the date of this document: the reduction of sharecapital by cancellation of all or part of the repurchased
shares, in particular to avoid the dilution effect related tocertain share capital increases for cash (i) reserved or to bereserved for employees of the EADS Group and/or (ii) carriedout or to be carried out in the context of the exercise of stock
options granted or to be granted to certain EADS Group
employees: 4,221,405 shares.
For information on shares held by EADS at the date of theentry into force of EC Regulation No. 2273/2003 and still held
by EADS at the date of this document, see below;
O purposes of the share repurchase programme to be
implemented by the Company (by order of decreasingpriority, without any effect on the actual order of use of
the repurchase authorisation, which will be determinedon a case-by-case basis by the Board of Directors basedon need):O the reduction of share capital by cancellation of all orpart of the repurchased shares, in particular to avoid the
dilution effect related to certain share capital increases forcash (i) reserved or to be reserved for employees of the
EADS Group and/or (ii) carried out or to be carried out inthe context of the exercise of stock options granted or to
be granted to certain EADS Group employees, it being
understood that the repurchased shares shall not carryany voting or dividend rights,
O the owning of shares for the performance of obligations

related to (i) debt ﬁnancial instruments convertible into
EADS shares, or (ii) employee share option programmes orother allocations of shares to EADS Group employees,
O the purchase of shares for retention and subsequent use

for exchange or payment in the framework of potential
external growth transactions, andO the liquidity or dynamism of the secondary market of the

EADS shares carried out pursuant to a liquidity agreement
to be entered into with an independent investment
services provider in compliance with the decision of the
AMF dated 1 October 2008 related to approval of liquidity
agreements recognised as market practices by the AMF;
O procedure:O maximum portion of the issued share capital that may be

repurchased by the Company: 10%,112 I EADS REGISTRATION DOCUMENT 2011

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O maximum number of shares that may be repurchased by

the Company: 82,380,506 shares, based on an issued
share capital of 823,805,062 shares as of the date of thisdocument. Assuming the exercise of all stock options
outstanding as of the date of this document, the thresholdof 10% would represent 83,787,499 shares based on
the 837,874,993 shares which would make up the entire
fully-diluted share capital of the Company,
O the amounts to be paid in consideration for the purchaseof the treasury shares must not, in accordance withapplicable Dutch law, exceed the equity components
which are repayable or distributable to the shareholders.
“Equity components repayable or distributable to theshareholders” means the contribution premiums (in relation
to contributions in kind), the issue premiums (in relation to
cash contributions) and the other reserves as set out in theﬁnancial statements of EADS, from which the repurchaseprice for the treasury shares must be deducted.
As of 31 December 2011, the respective values of eachof these EADS equity components which are by nature
repayable or distributable to the shareholders were:€ 7,519,000,000 (contribution premiums), € -3,486,000,000(other reserves and retained earnings, including net proﬁt
for the year) and € -113,000,000 (treasury shares), i.e. anaggregate amount of € 3,920,000,000.
EADS reserves the right to implement the share purchaseprogramme to its full extent and undertakes not to exceed,
directly or indirectly, the threshold of 10% of the issued
share capital as well as the amount of € 3,920,000,000
throughout the term of the programme.
Finally, EADS undertakes to maintain at any time a
sufﬁcient number of shares in public hands to meet thethresholds of NYSE Euronext,
O shares may be bought or sold at any time (including during

a public offering) to the extent authorised by the stock
exchange regulations and by any means, including, without
limitation, by means of block trades and including the useof options, combinations of derivative ﬁnancial instrumentsor the issue of securities giving rights in any way to EADS
shares within the limits set out in this document. Moreover,
EADS will use call options and swaps that have beenacquired pursuant to the agreements it had entered into
during the previous share repurchase programme (seebelow) and does not exclude the possibility of using a
structure of transaction similar to the one that had beenused in the previous share repurchase programme in orderto repurchase its own shares.
The portion of shares repurchased through the useof block trades may amount to all the shares to be
repurchased in the context of this programme,
O in addition, in the event that derivative ﬁnancial

instruments are used, EADS will ensure that it does notuse mechanisms which would signiﬁcantly increase thevolatility of the shares in particular in the context of call
options,
O characteristics of the shares to be repurchased by theCompany: shares of EADS, a company listed on Euronext
Paris, on the regulierter Markt of the Frankfurt StockGENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITALSHAREHOLDINGS AND VOTING RIGHTS

1
Exchange and on the Madrid, Bilbao, Barcelona andValencia Stock Exchanges,
O Daimler, DASA AG, the French State, Lagardère, SEPI,

Sogeade and Sogepa will retain all of their rights,
depending on the circumstances, to sell their available
EADS shares to EADS as part of this share repurchaseprogramme,
O maximum purchase price per share: € 50;

O term of the share repurchase programme and othercharacteristics: this share repurchase programme shall bevalid until 31 November 2013 inclusive, i.e. the date of expiry of
the authorisation requested from the Annual General Meetingof Shareholders to be held on 31 May 2012. As one of the main
aims of this EADS share repurchase programme is related
to the possible exercise by EADS Group employees of stock
options granted to them from 2002 to 2006, it is currently
intended (i) that such a programme be continued and renewed
until at least 17 December 2016 (16 December 2016 being thelatest date upon which an employee of the EADS Group may
exercise all or part of his/her stock options granted in 2006)
and (ii) that the Annual General Meeting of Shareholders be
asked to renew the authorisations until such date.

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The 1,843,814 EADS shares held by EADS at the date of
the entry into force of EC Regulation No. 2273/2003 of
22 December 2003 on 13 October 2004 and still held by EADSat the date of this document shall be, in order of decreasingpriority, either (i) cancelled pursuant to a decision to be made,according to Dutch law, by an Annual General Meeting of
Shareholders, to avoid the dilution effect related to certain sharecapital increases for cash carried out, during the ﬁnancial year
preceding such Annual General Meeting of Shareholders, inthe context of an EADS employee share ownership programme
and/or upon the exercise of stock options granted to certain
EADS Group employees, or (ii) retained in order to allow theperformance of certain obligations described within the aims of
the share repurchase programme referred to in this document,or (iii) used for exchange or payment in the framework of apotential external growth transaction, or (iv) sold in the context
of a liquidity agreement.
As of the date of this document, EADS has not entered into any
liquidity agreement with an independent investment services
provider in the context of the share repurchase programme.

In the context of the share repurchase programme, EADS has used derivative ﬁnancial instruments (see below). These derivative
ﬁnancial instruments (call options) have the characteristics set out in the table below:
Opening positions as of the date of this document
Opening position on the purchase

Call purchased

Forward sale

Call purchased

Sale

Number of Shares
Average Maximum Maturity Date (1)Average Exercise Price

Opening position on the sale

6,710,403---

9 August 2012

-

-

-

-

-

-

-

(1)

(1) See “Corporate Governance — 4.3.3 Long-Term Incentive Plans”.

In order to compensate for the dilution effect related to theshare capital increases in cash which would result from theexercise of stock options granted to certain EADS Group
employees in 2002, EADS has implemented a share repurchaseprogramme according to the neutral delta method. In thisregard, EADS has entered into the following agreements:(i) call options agreements allowing EADS to acquire from a
top ranking French bank a number of EADS’ shares equal to
the number of shares to be created as a result of the exerciseof stock options granted to certain EADS Group employees in
2002, and (ii) swap agreements for the periodical adjustmentof an amount in cash equal to the premiums paid by EADS
to a top ranking French bank pursuant to the call options
agreements, in accordance with the neutral delta method.

method formula. The total amount paid for these shares by the
top ranking French bank corresponds to the ﬁnancial charge
borne by EADS, as determined from the variable amounts in theswap agreement. On the other hand, in the case of a reductionin the EADS share price, the top ranking French bank must sella number of EADS shares which derived from the reduction in
the share price according to the neutral delta method formula.
The total amount received by the top ranking French bank forthe sale of these shares corresponds to the ﬁnancial revenues
received by EADS as determined from the variable amounts inthe swap contract. Under these conditions, the ﬁnal amount due
as a result of the purchases of the call options is only knownat the time of the payment as determined from the last variable
amount of the swap contract.

Pursuant to these agreements, the call options which EADS
acquired from a top ranking French bank, have the same terms(as to exercise prices, exercise dates, quantities and expiry
dates) as the stock options granted pursuant to the 2002 stock
option plan. If the EADS share price increases, the top ranking
French bank must buy the number of EADS shares which thenderived from the increase in price according to the delta neutral

The structure of the transaction aims at covering the dilution
effect and the price risk for EADS linked to the exercise of stock
options granted to certain EADS Group employees in 2002.
Within this context, EADS uses the internal control procedures
put in place by the Company in order to ensure the reliabilityof the management of the risks linked to these call options
and swap. The procedures and tools for reporting have been

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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITALDIVIDENDS

1
set up, the responsibility and powers have been delegatedto the Finance and Treasury department of EADS which has
responsibility for all operational decisions and all activities within
its competence. The relevant competent bodies within theorganisation must be made aware of all substantial transactions,activities and risks.
From an accounting standpoint, the call options qualify as
equity instruments, provided that they are physically settled
in EADS’ own stock (IAS 32.16). The initial accounting led toa reduction in cash balances for the premiums paid and instockholder’s equity for the same corresponding amount.
With each variable payment made in application of the deltaneutral method formula, there is a corresponding impact on

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cash and on equity to reﬂect the cumulative premiums paidon the call options. Upon exercise of the call options, EADS
decreases cash by the amount paid (strike price times numberof options) and deducts treasury shares from shareholder’sequity. Variations in the market value of the call options are notrecognised in the ﬁnancial statements. All such transactions are
therefore neutral on the income statement.
The top ranking French bank has contractually undertaken tocomply with the regulations in force in relation to repurchaseprocedures applicable to EADS and in particular the provisionsof Articles 241-1 to 241-6 and 631-1 et seq. of the AMF General
Regulations.

3.4 Dividends
3.4.1 Dividends and Cash Distributions Paid Since the Incorporationof the Company
Cash distributions paid to the shareholders since the incorporation of the Company are set forth in the table below:
Date of the cash distribution payment

Gross amount per share (1)2000

27 June 2001

€ 0.502001

28 June 2002

€ 0.502002

12 June 2003

€ 0.302003

4 June 2004

€ 0.402004

8 June 2005

€ 0.502005

1 June 2006

€ 0.652006

16 May 2007

€ 0.12Financial Year2007

4 June 2008

€ 0.12

2008

8 June 2009

€ 0.20

2009

-

-

2010

6 June 2011

€ 0.22(1) Note: figures have not been adjusted to take into account changes in the number of shares outstanding.

3.4.2 Dividend Policy of EADS
Based on earnings per share of € 1.27 in 2011, the Board of
Directors has proposed payment of a dividend of € 0.45 pershare to the next Annual General Meeting of Shareholders.
Subject to approval by the Annual General Meeting, thedividend is expected to be paid on 7 June 2012 (expectedrecord date of 6 June 2012).

114 I EADS REGISTRATION DOCUMENT 2011

This is converging towards a pay-out ratio in line with sector andindustry peers. From the Board of Directors’ perspective, as theCompany is maturing, this policy shall be the orientation for the
future.

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3.4.3 Unclaimed Dividends
Pursuant to Article 31 of the Articles of Association, the claim
for payment of a dividend or other distribution approved by thegeneral meeting shall lapse ﬁve years after the day on whichsuch claim becomes due and payable. The claim for payment

of interim dividends shall lapse ﬁve years after the day on which
the claim for payment of the dividend against which the interim
dividend could be distributed becomes due and payable.

3.4.4 Taxation
The statements below represent a broad analysis of thecurrent Netherlands tax laws. The description is limited tothe material tax implications for a holder of the Company’s
shares (the “Shares”) who is not, or is not treated as, aresident of the Netherlands for any Netherlands tax purposes(a “Non-Resident Holder”). Certain categories of holders of
the Company’s shares may be subject to special rules which
are not addressed below and which may be substantiallydifferent from the general rules described below. Investors
who are in doubt as to their tax position in the Netherlands
and in their state of residence should consult their professional
Advisors. Where the summary refers to “the Netherlands”
or “Netherlands”, it refers only to the European part of theKingdom of the Netherlands.

Withholding Tax on Dividends
In general, a dividend distributed by the Company in respectof Shares will be subject to a withholding tax imposed by
the Netherlands at a statutory rate of 15%. Dividends include
dividends in cash or in kind, deemed and constructive
dividends, repayment of paid-in capital not recognised ascapital for Netherlands dividend withholding tax purposes, andliquidation proceeds in excess of the average paid-in capital
recognised as capital for Netherlands dividend withholding tax
purposes. Stock dividends paid out of the Company’s paid-inshare premium, recognised as capital for Netherlands dividend
withholding tax purposes, will not be subject to this withholdingtax.
A Non-Resident Holder of Shares can be eligible for a partial orcomplete exemption or refund of all or a portion of the above
withholding tax pursuant to domestic rules or under a tax
convention that is in effect between the Netherlands and the
Non-Resident Holder’s country of residence. The Netherlands
has concluded such conventions with the US, Canada,
Switzerland, Japan, almost all European Union member statesand other countries.

Withholding Tax on Sale or
Other Dispositions of Shares
Payments on the sale or other dispositions of Shares will not
be subject to Netherlands withholding tax, unless the sale orother disposition is, or is deemed to be, made to the Company
or a direct or indirect subsidiary of the Company. In principle,
a redemption or sale to the Company or a direct or indirect

subsidiary of the Company will be treated as a dividend andwill be subject to the rules set forth in “Withholding Tax on
Dividends” above.

Taxes on Income and Capital Gains
A Non-Resident Holder who receives dividends distributed by
the Company on Shares or who realises a gain from the sale ordisposition of Shares, will not be subject to Netherlands taxation
on income or capital gains unless:O such income or gain is attributable to an enterprise or part
thereof which is either effectively managed in the Netherlands
or carried on through a permanent establishment(“vaste inrichting”) or permanent representative (“vaste
vertegenwoordiger”) in the Netherlands;
O the Non-Resident Holder is not an individual and the
Non-Resident Holder has or is deemed to have, directly or
indirectly, a substantial interest (“aanmerkelijk belang”) ora deemed substantial interest in the Company and suchinterest (i) does not form part of the assets of an enterpriseand (ii) is held by the Non-Resident Holder with the main
objective, or one of the main objectives, to avoid Netherlands
withholding tax on dividends or Netherlands individual
income tax at the level of another person or entity; orO the Non-Resident Holder is an individual and (i) the
Non-Resident Holder has, directly or indirectly, a substantial
interest (“aanmerkelijk belang”) or a deemed substantial
interest in the Company and such interest does not form
part of the assets of an enterprise, or (ii) such income or gain
qualifies as income from miscellaneous activities (“belastbaar
resultaat uit overige werkzaamheden”) in the Netherlands
as defined in the Dutch Income Tax Act 2001 (“Wetinkomstenbelasting 2001”).
Generally, a Non-Resident Holder of Shares will not have asubstantial interest in the Company’s share capital, unless the
Non-Resident Holder, alone or together with certain related
persons holds, jointly or severally and directly or indirectly,
Shares in the Company, or a right to acquire Shares in the
Company representing 5% or more of the Company’s total
issued and outstanding share capital or any class thereof.
Generally, a deemed substantial interest exists if all or partof a substantial interest has been or is deemed to have been
disposed of with application of a roll-over relief.

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Gift or Inheritance Taxes

Other Taxes and Duties

Netherlands gift or inheritance taxes will not be levied on
the transfer of Shares by way of gift, or upon the death of a
Non-Resident Holder, unless the transfer is construed as aninheritance or gift made by or on behalf of a person who, at thetime of the gift or death, is or is deemed to be resident in the
Netherlands.

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

Value-Added Tax
No Netherlands value-added tax is imposed on dividends on
the Shares or on the transfer of the Shares.

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

3.5 Annual Securities Disclosure Report
The list of the following announcements comprises the disclosures made pursuant to Section 5:25f of the WFT and constitutes
the annual securities disclosure report in application of Article 10 of Directive 2003/71/EC. The announcements and underlying
information are on display and may be inspected during the life of this Registration Document on www.eads.com:
Press release – First Quarter 2011 Results

13 May 2011

Press release – First Half 2011 Results

29 July 2011

Press release – EADS acquires Vizada for its Astrium Division
Press release – Third Quarter 2011 Results
Press release – 2011 Annual Results

1 August 2011
10 November 20118 March 2012

In addition, EADS publishes announcements made in the ordinary course of business which are also available on www.eads.com.

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EADS REGISTRATION DOCUMENT 2011 I 117

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Corporate Governance
4.1 Management and Control

121

4.1.1 Board of Directors, Chairman and Chief Executive Ofﬁcer

122

4.1.2 Board Committees

132

4.1.3 Executive Committee

133

4.1.4 Enterprise Risk Management System

135

4.1.5 Compliance Organisation

139

4.2 Interests of Directors and Principal Executive Ofﬁcers

140

4.2.1 Remuneration Granted to Directors and Principal Executive Ofﬁcers

140

4.2.2 Long-Term Incentives Granted to the Chief Executive Ofﬁcer

143

4.2.3 Related Party Transactions

144

4.2.4 Loans and Guarantees Granted to Directors

144

4.3 Employee Proﬁt Sharing and Incentive Plans

144

4.3.1 Employee Proﬁt Sharing and Incentive Agreements

144

4.3.2 Employee Share Ownership Plans

145

4.3.3 Long-Term Incentive Plans

145

EADS REGISTRATION DOCUMENT 2011 I 119

CORPORATE GOVERNANCE

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In accordance with Dutch law and with the provisions of the
Dutch Corporate Governance Code as amended at the endof 2008 (the “Dutch Code”), which includes a number of
non-mandatory recommendations, the Company either applies
the provisions of the Dutch Code or, if applicable, explains andgives sound reasons for their non-application. While EADS, in its
continuous efforts to adhere to the highest standards, applies
most of the current recommendations of the Dutch Code,it must, in accordance with the “apply or explain” principle,
provide the explanations below.
For the full text of the Dutch Code, please refer towww.commissiecorporategovernance.nl.

1. EADS is a controlled company and,
therefore, a number of the Membersof the Board of Directors, Audit
Committee, Remuneration and
Nomination Committee and Strategic
Committee are designated and can beremoved by its controlling shareholders
Nevertheless it should be noted that a self-assessment of theBoard of Directors conﬁrmed that the Members of the Boardof Directors designated by the controlling shareholders holdopinions and defend positions that are in all relevant aspectsaligned with the economic interests of individual shareholders.
Given the absence of material conﬂicting business interests
between EADS and its controlling shareholders, and the
independence of the controlling shareholders from one another,
the Members of the Board of Directors designated by thecontrolling shareholders are deemed to fairly represent theinterest of all shareholders in acting critically and independentlyof one another and of any particular interests. Furthermore,both the Board of Directors’ composition (with a wide rangeof different experiences represented) and the running of
meetings are conducive to the expression of autonomous andcomplementary views.
Accordingly:(a) four Members of the Board of Directors out of eleven
are independent (whereas provision III.2.1 of the Dutch
Code recommends that there be no more than one
non-independent Board Member);(b) Members of the Board of Directors retire simultaneously ona five-year basis (whereas provision III.3.6 of the Dutch Coderecommends that there be a retirement schedule to avoid,as far as possible, a situation in which many non-Executive
Members of the Board of Directors retire at the same time);(c) the Board of Directors is headed by the Chairman of theBoard of Directors. In case of dismissal or resignation of
the Chairman, the Board shall immediately designate a new
Chairman. There is therefore no need for a Vice-Chairman
to deal with the situation when vacancies occur (whereas
provision III.4.1(f) of the Dutch Code recommends that there
be a Vice-Chairman);

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Back to Contents(d) EADS’ Audit Committee does not meet without the Chief
Executive Officer being present (whereas provision III.5.9 of
the Dutch Code recommends this);(e) EADS’ Audit Committee includes two Members of the Boardof Directors designated by the controlling shareholders(whereas provision III.5.1 of the Dutch Code recommends that
there be no more than one non-independent Audit Committee
Member);(f) EADS’ Remuneration and Nomination Committee includes
two Members of the Board of Directors designated by thecontrolling shareholders (whereas provision III.5.1 of the
Dutch Code recommends that there be no more than one
non-independent Committee Member); and(g) EADS’ Remuneration and Nomination Committee is not therelevant body responsible for the selection procedure andnomination proposals for Members of the Board of Directors(whereas provision III.5.14 (a) of the Dutch Code recommends
that such Committee focus on drawing up selection criteria
and the appointment procedures for Members of the Boardof Directors; and provision III.5.14 (d) recommends that such
Committee focus on making proposals for appointments andreappointments).

2. As for remuneration of Membersof the Board of Directors
EADS applies different rules for the remuneration of Executive(the Chief Executive Ofﬁcer) and non-Executive Members of
the Board of Directors, as explained in “— 4.2.1.2 Detailed
Remuneration Policy”.
In case of dismissal from the Company of the Chief Executive
Ofﬁcer, a termination indemnity equal to one and a half times
the annual total target salary would be paid subject to thefollowing conditions (whereas provision II.2.8 of the Dutch Coderecommends that the maximum remuneration in the eventof dismissal be one year’s salary, and that if the maximum of
one year’s salary would be manifestly unreasonable for an
Executive Board Member who is dismissed during his ﬁrst termof ofﬁce, such Board Member be eligible for severance pay notexceeding twice the annual salary): the Board of Directors has
concluded that the Chief Executive Ofﬁcer can no longer fulﬁlhis position as a result of change of EADS’ strategy or policies
or as a result of a change in control of EADS. The terminationindemnity would be paid only provided that the performance
conditions assessed by the Board of Directors had been fulﬁlled
by the Chief Executive Ofﬁcer.
However, this termination indemnity is no longer applicable,
since the Chief Executive Ofﬁcer has reached the age of 65 andis able to retire immediately.

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3. EADS is listed on the Frankfurt, Parisand Spanish stock exchanges andendeavours to strictly comply with therelevant regulations and take into accountthe general principles on these markets
protecting all of its stakeholders(a) Moreover, EADS has adopted Insider Trading Rules providing
for specific internal rules, inter alia, governing members’ of theBoard of Directors holding and trading of shares in EADS andother companies. Therefore, in line with these rules and theseregulations and common practices in the jurisdictions in which
the Company is listed;

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is five years without limitation on renewal (whereas provisions
II.1.1 and III.3.5 of the Dutch Code recommend that there
be no more than three four-year terms for non-Executive
Members of the Board of Directors and that there be four-year
terms (without limitation on renewal) for Executive Members of
the Board of Directors);(d) EADS does not follow various recommendations for
dealings with analysts, including allowing shareholders tofollow meetings with analysts in real time and publishingpresentations to analysts on the website as set out inprovision IV.3.1 of the Dutch Code.

(b) EADS does not require Members of the Board of Directors
to hold their securities in the Company as a long-term
investment (whereas provision III.7.2 of the Dutch Coderecommends such a treatment);

4.1 Management and Control
Since its creation in 2000 and until 22 October 2007, EADS
was led by a dual-headed management structure, with two
Chairmen and two co-Chief Executive Ofﬁcers, which provided
the necessary balance and stability required for a company withsuch a unique industrial and multi-national heritage.
On 16 July 2007, Daimler (formerly DaimlerChrysler), theFrench Government and Lagardère decided, together with the
EADS management team, to implement a new management
and leadership structure. The German Government wasalso consulted. Guiding principles of this modiﬁcation
were efﬁciency, cohesiveness and simpliﬁcation of EADS’management and leadership structure, towards corporate
governance best practices while maintaining a balance between
the French and the German core shareholders. Under thesimpliﬁed management structure, EADS is now led by a single
Chairman and a single Chief Executive Ofﬁcer.

number of independent members on the Board of Directors toappropriately reﬂect the global proﬁle of EADS by conforming tointernational corporate governance best practices.
In this respect, both Daimler and Sogeade relinquished twoseats on the Board of Directors and four independent Directors
were elected during the Extraordinary General Meeting of
Shareholders held on 22 October 2007. Apart from the Chief
Executive Ofﬁcer, the Board of Directors no longer comprises
Executive Directors.
The core shareholders have also decided to amend the
responsibilities assumed by the Board of Directors, theChairman, the Chief Executive Ofﬁcer and the Executive
Committee, as described below. These modiﬁcations were
fully implemented and became effective from the Extraordinary
General Meeting of Shareholders and Board of Directors’
meeting both held on 22 October 2007.

The core shareholders also concluded that it was in thebest interest of the Group to recommend an increase in the

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4.1.1 Board of Directors, Chairman and Chief Executive Ofﬁcer
4.1.1.1

Composition, Powers and Rules

Pursuant to the Articles of Association, the Board of Directors is
responsible for the management of the Company.
The Board of Directors consists of a maximum of elevenmembers appointed and removed by the shareholders’meeting. The Board of Directors adopted rules governing its
internal affairs (the “Rules”) at a Board of Directors’ meeting
held on 7 July 2000. The Rules were amended at a Boardof Directors’ meeting held on 5 December 2003 to take
into account recommendations for changes to corporate
governance. These Rules were further amended at a Boardof Directors’ meeting held on 22 October 2007, to take into
account the corporate governance modiﬁcations approved
during the Extraordinary General Meeting of Shareholders held
the same day.
The Rules specify the composition, the role and the key
responsibilities of the Board of Directors, and also determine
the manner of appointment and the responsibilities of the
Chairman and the Chief Executive Ofﬁcer. Further, the Rules
also stipulate the creation of three committees (the Audit
Committee, the Remuneration and Nomination Committee andthe Strategic Committee) and specify their composition, roleand operating rules.
The Board of Directors has also adopted speciﬁc Insider Trading
Rules, which restrict its members from trading in EADS sharesin certain circumstances (for more information, please see“General Description of the Company and its Share Capital —3.1.3 Governing Laws and Disclosures”).
The parties to the Participation Agreement (as amended on
22 October 2007 and as deﬁned in the opening paragraph of“General Description of the Company and its Share Capital —3.3.2 Relationships with Principal Shareholders”) have agreed
that the voting rights attached to the Indirect EADS Shares shallbe exercised by EADS Participations B.V. to ensure that theBoard of Directors of EADS comprises the Directors of EADSParticipations B.V. and four additional independent Directors.
According to the Rules, an independent Director is deﬁned
as “a Director who is not an officer, director, employee, agent
or otherwise has any significant commercial or professional
connection with either the DASA Group, the Lagardère Group,
the Sogepa Group, the SEPI Group, the French State, theGerman State, the Spanish State or the EADS Group”.
Pursuant to the Participation Agreement, the Board of
Directors comprises eleven members as follows (the “Boardof Directors”, the Members of the Board of Directors beingreferred to as the “Directors”):
O one non-Executive Chairman, appointed on joint proposal by
the Daimler-Directors and the Sogeade-Directors;
O the Chief Executive Officer of EADS, appointed on joint
proposal by the Daimler-Directors and the SogeadeDirectors;

122 I EADS REGISTRATION DOCUMENT 2011

O two Directors nominated by Daimler;
O two Directors nominated by Sogeade;O one Director nominated by SEPI, so long as the Indirect
EADS Shares held by SEPI represent 5% or more of the total
number of EADS Shares but in any case until the Annual
General Meeting of Shareholders to be held in 2012; andO four independent Directors, jointly proposed by the Chairman
and the Chief Executive Officer of EADS and individually
approved by the Board.
Pursuant to the Articles of Association, each Member ofthe Board of Directors holds ofﬁce for a term that expires at
the Annual General Meeting of Shareholders to be held in
2012. See “1. Information on EADS’ Activities — 1.2 Recent
Developments” for the proposed composition of the Boardof Directors following such meeting. Members of the Boardof Directors will retire at each ﬁfth Annual General Meeting of
Shareholders thereafter.
The shareholders’ meeting may at all times suspend or dismiss
any Member of the Board of Directors. There is no limitation on
the number of terms that a Director may serve.
The Board of Directors appoints a Chairman, upon the joint
proposal of the Daimler-Directors and the Sogeade-Directors.
The Chairman ensures the smooth functioning of the Board of
Directors in particular with respect to its relations with the Chief
Executive Ofﬁcer with whom he teams up for top level strategic
discussions with outside partners, which are conducted under
his supervision.
The Chairman shall have either French or German nationality,
provided that the Chief Executive Ofﬁcer is of the othernationality.
The Chairman can submit his resignation as Chairman to theBoard of Directors or can be dismissed as Chairman by the
Board of Directors, upon the joint proposal of the DaimlerDirectors and the Sogeade-Directors. The appointment
further terminates if the Chairman is dismissed or resigns as
Director. Immediately following the dismissal or resignation of
the Chairman, and if the Daimler-Directors and the SogeadeDirectors do not immediately jointly designate a new Chairman,
the Board of Directors appoints by simple majority a Director(with the same citizenship as the former Chairman) as interim
Chairman for a period which expires at the earlier of either(i) twenty clear days after the Daimler-Directors and the
Sogeade-Directors jointly designate a new Chairman (during
which period, a Board of Directors meeting is called in order
to appoint the new Chairman, upon the joint proposal of theDaimler-Directors and the Sogeade-Directors), or (ii) two months
from that interim Chairman’s appointment.
Upon request by any Member of the Board of Directors madethree years after the beginning of the Chairman’s term andalleging that signiﬁcant adverse deviation(s) from objectives
and/failure(s) to implement the strategy deﬁned by the Board of

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Directors occurred, the Board of Directors shall meet, to decide
whether deviations and/or failures actually occurred during thisperiod and if so, to decide whether to renew its conﬁdence
in the Chairman (the “Vote of Conﬁdence”). The Board of
Directors resolves upon such Vote of Conﬁdence by simple
majority. The Chairman is removed if he does not obtain such
Vote of Conﬁdence, a new Chairman being then appointed inaccordance with the above.
Upon the joint proposal by the Daimler-Directors and the
Sogeade-Directors, the Board of Directors has appointed a
Chief Executive Ofﬁcer to be responsible for the day-to-day
management of the Company. The way the Chief Executive
Ofﬁcer can resign or be dismissed and the way the Chief
Executive Ofﬁcer would, if any, be replaced are identical tothose applying to the Chairman. The Vote of Conﬁdence
procedure stated above is also applicable to the Chief Executive
Ofﬁcer under the same conditions as for the Chairman.

Powers of the Board of Directors
The Company is represented by the Board of Directors or by
the Chief Executive Ofﬁcer. The Chief Executive Ofﬁcer may notenter into transactions that form part of the key responsibilitiesof the Board of Directors unless these transactions have been
approved by the Board of Directors.

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O deciding upon the appointments of the Airbus Shareholder
Committee, the EADS Corporate Secretary and the Chairmenof the Supervisory Board (or similar organ) of other importantGroup companies and Business Units;
O approving material changes to the organisational structure of
the Group;
O approving investments, projects or product decisions
or divestments of the Group with a value exceeding€ 350,000,000 (it being understood that this item shallrequire the Qualified Majority only for investments, projects or
product decisions or divestments of the EADS Group with avalue exceeding € 500,000,000);
O approving strategic alliances and co-operation agreements of
the Group (Qualified Majority);
O approving principles and guidelines governing the conductof the Group in matters involving non-contractual liabilities(like environmental matters, quality assurance, financial
announcement, integrity) as well as the corporate identity of
the Group;
O approving matters of shareholder policy, major actions or
major announcements to the capital markets;

The key responsibilities of the Board of Directors include
amongst others:

O approving any material decision regarding the ballistic
missiles business of the Group (Qualified Majority);

O approving any change in the nature and scope of thebusiness of the Group;

O approving other measures and business of fundamental
significance for the Group or which involve an abnormal levelof risk; andO approving any proposal to be submitted to the General
Meeting of Shareholders in order to amend the Articles of
Association of EADS (Qualified Majority, as defined below);
O approving the overall strategy and the strategic plan of theGroup;
O approving the operational business plan and the yearlybudget of the Group;
O setting the major performance targets of the Group;
O monitoring on a quarterly basis, the operating performance of
the Group;
O designating or removing the Chairman and the Chief
Executive Officer and deciding upon the designation or
removal of the Chief Executive Officer of Airbus; it being
understood that (i) the Chairman and the Chief Executive
Officer of Airbus shall be of the same citizenship, either
French or German, and the Chief Executive Officer andthe Airbus COO of the other citizenship, and (ii) the Chief
Executive Officer and the Airbus Chief Executive Officer may
not be the same person (Qualified Majority);
O appointing the members of the Executive Committee (seebelow), as a whole team, not on an individual basis;O establishing and approving amendments to the Rules and to
the rules for the Executive Committee (Qualified Majority);

O approving any proposal by the Chairman and the Chief
Executive Officer as to the appointment of the independent
Directors, for submission to the General Meeting of
Shareholders.

Voting and Rules
Each Director has one vote, provided that, if there are more
Sogeade-nominated Directors than Daimler-nominatedDirectors present or represented at the Meeting, the Daimlernominated Director who is present at the Meeting can exercise
the same number of votes as the Sogeade-nominated Directors
who are present or represented at the Meeting, and vice versa.
All decisions of the Board of Directors are taken by a simple
majority of votes (six Directors, present or represented, voting
in favour of the decision), except for the votes relating to certain
matters which can only be validly resolved upon a majorityof votes including the unanimous vote of the two Sogeadenominated Directors and the two Daimler nominated Directors(the “Qualiﬁed Majority”). The quorum for the transaction ofbusiness at meetings of the Board of Directors requires thepresence of at least one of the Sogeade-nominated Directors
and one of the Daimler-nominated Directors. A Director canauthorise another Director to represent him or her at a Board
meeting and to vote on his or her behalf. Such authorisationmust be in writing.

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In the event of a deadlock in the Board of Directors, otherthan a deadlock giving Daimler the right to exercise the put
option granted to it by Sogeade (see “General Descriptionof the Company and its Share Capital — 3.3.2 Relationships
with Principal Shareholders — Put Option”), the matter shallbe referred to Arnaud Lagardère (or such person as shall be
nominated by Lagardère) as representative of Sogeade andto the Chief Executive Ofﬁcer of Daimler. In the event that thematter in question, including a deadlock giving Daimler the rightto exercise the put option (but in this case with the agreementof Sogepa and Daimler) is a matter within the competence ofthe general meeting of EADS, a resolution on the issue shall be
put to the general meeting, with the voting rights of Sogeade,
Daimler and SEPI being negated.
Pursuant to the Rules, the Board of Directors may form
committees from its members. In addition to the Audit
Committee, the Remuneration and Nomination Committee andthe Strategic Committee, the Board of Directors may form othercommittees to which it may transfer certain minor or ancillarydecision-making functions although such assignment does
not negate the joint responsibility of all Directors. The quorum
for the transaction of business at any meeting of a committee

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requires the presence of at least one of the Sogeade-nominatedDirectors and one of the Daimler-nominated Directors.
All decisions of a committee require the simple majority ofthe members.
In addition to the Rules, the work of the Board of Directors
is governed by internal Directors’ guidelines (the “Directors’
Guidelines”) adopted in light of corporate governance bestpractices. The Directors’ Guidelines are composed of a
Directors’ charter (the “Directors’ Charter”) detailing therights and duties of the Members of the Board of Directors,
an Audit Committee charter (the “Audit Committee Charter”),
a Remuneration and Nomination Committee charter(the “Remuneration and Nomination Charter”) and a Strategic
Committee charter (the “Strategic Committee Charter”),
with each such charter setting forth the respective committees’
roles.
The Directors’ Charter sets out core principles that bind eachand every Director, such as acting in the best interest of theCompany and its stakeholders, devoting necessary time andattention to the carrying out of their duties and avoiding any andall conﬂicts of interest.

Composition of the Board of Directors
Term started (as memberof the Board of Directors)

Termexpires

Principal function

Status

52

2007

2012

Chairman of EADS NV

Non-Executive

Louis Gallois

68

2000, re-elected in 2005
and 20072012

Chief Executive Officer of EADS NV

Executive

Rolf Bartke

64

2007

2012

Chairman of Recaro-Group

Nominated by Daimler

Dominique D’Hinnin

52

2007

2012

Co-Managing Partner of Lagardère SCA

Nominated by Sogeade

Juan Manuel Eguiagaray
Ucelay66

2005, re-elected in 20072012

Economic Advisor

Nominated by SEPI

50

2003, re-elected in 2005
and 20072012

General and Managing Partnerof Lagardère SCA

Nominated by Sogeade

2012

Member of the Management Boardof Deutsche Bank AG

Independent
Independent

Name

Age

Bodo Uebber

Arnaud Lagardère
Hermann-Josef Lamberti

56

2007

Lakshmi N. Mittal

61

2007

2012

Chairman and Chief Executive Officer
of ArcelorMittal SA

Sir John Parker

69

2007

2012

Chairman of Anglo American PLC

Independent

2012

Honorary Presidentof BNP Paribas SA

Independent

2012

Member of the Management Boardof Daimler AG

Nominated by Daimler

Michel Pébereau
Wilfried Porth

70
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2007
2009

Note: Status as of 1 March 2012. The professional address of all Members of the Board of Directors for any matter relating to EADS is Mendelweg 30, 2333 CS Leiden, The Netherlands.

Within EADS, each Director must have the required mix ofexperience, 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’s committees. The Board of Directors also believes
that having a diverse composition among its members with

124 I EADS REGISTRATION DOCUMENT 2011

respect to gender, experience, national origin, etc. is valuablefor the quality and efﬁciency of its work.
The Company has not appointed observers to the Board of
Directors. Pursuant to applicable Dutch law, the employees are
not entitled to elect a Director. There is no minimum number ofshares that must be held by a Director.

CORPORATE GOVERNANCE
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1Curriculum Vitae and other Mandates
and Duties Performed in any Company
by the Members of the Board of Directors
Bodo Uebber
Mr Bodo Uebber was appointed Chairman of EADS in
April 2009. He is a Member of the Board of Management ofDaimler AG, responsible for Finance and Controlling (since
16 December 2004) as well as for the Daimler Financial
Services Division (since 16 December 2003). He previously held
various leadership positions in ﬁnance within Dornier LuftfahrtGmbH, DASA AG and MTU Aero Engines GmbH. Mr Uebber
was born on 18 August 1959 in Solingen. He graduated in1985 with a degree in engineering and economics at theTechnical University of Karlsruhe. In the same year, he joined
Messerschmitt-Bölkow-Blohm GmbH (MBB).
Current mandates in addition to the one listed in the chart
above are set forth below:• Member of the Board of Management of Daimler AG;• Chairman of the Board of Directors of EADSParticipations B.V.;• Chairman of the Supervisory Boardof Daimler Financial Services AG;•

Member of the Supervisory Board of MercedesBenz Bank AG;•• Member of the Supervisory Board

Member of the Supervisory Board of Bertelsmann AG;
of Stiftung Deutsche Sporthilfe;

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Back to Contents• Member of the Supervisory Board of Daimler España
Holding S.A. (resigned 30 June 2008);• Chairman of the Supervisory Board of Daimler France
Holding S.A.S. (resigned 31 October 2008);• Member of the Board of Directors of Freightliner LLC(resigned 30 September 2009);• Member of the Supervisory Board of McLaren (resigned
10 November 2009); and• Member of the Supervisory Board of Talanx AG (resigned
31 August 2011).

Louis Gallois
Mr Louis Gallois has been Chief Executive Ofﬁcer (CEO) of
EADS since August 2007, after having been co-CEO of EADS,and President and CEO of Airbus since 2006. Previously,
he served successively as Chairman and CEO of SNECMA,
Chairman and CEO of Aerospatiale and Chairman of SNCF.
Earlier in his career, he held positions in the French Ministry of
Economy and Finance, the Ministry of Research and Industry,
and the Ministry of Defence. Mr Gallois graduated from the
École des hautes études commerciales in economic sciences
and is an alumnus of the École nationale d’administration.
Current mandates in addition to the one listed in the chart
above are set forth below:• Chief Executive Ofﬁcer of EADS Participations B.V.;• Member of the Board of Directors of Stichting
Administratiekantoor EADS;“Stifterverband der Deutschen Wissenschaft”;• Member of the Supervisory Board of Michelin;• Member of the Board of Directors of École Centrale des Arts

Member of the Advisory Board of Daimler
Unterstützungskasse GmbH;• President of Universcience Partenaires.

• Member of the Investment Council of•

2• Member of the Advisory Board of Deutsche Bank AG
in Munich;• Member of the Advisory Board of Landesbank BadenWürttemberg;• Member of the Donor’s Circle of the Jewish Museum, Berlin;• Member of the Board of Trustees “Museumsinsel”, Berlin; and• Member of the Board of Trustees “Stuttgarter Galerieverein”.
Former mandates for the last ﬁve years:• Member of the Board of Directors of DaimlerChrysler México
Holding S.A. de C.V. (resigned 31 July 2007);• Chairman of the Board of Directors of DaimlerChrysler North
America Holding Corporation (DCNAH) (resigned 3 August2007);et Manufactures; andFormer mandates for the last ﬁve years:• Member of the Board of Directors of Dassault Aviation(resigned 26 November 2008).

Rolf Bartke
Mr Rolf Bartke is Chairman of Recaro-Group. He was Chairmanof Kuka AG until 2009 after being Head of the vans Business
Unit at DaimlerChrysler AG from 1995 to 2006. Previously,
he was Mercedes Benz’s Managing Director in the ﬁelds ofcommercial vehicle planning and projects, commercial vehicle
development, marketing and sales planning for Unimog andMB-trac. He started his career in 1976 as Managing Director ofcommercial agents of Unimat GmbH in Düsseldorf. Mr Bartke
holds a PhD in economics from the University of Karlsruhe.
Current mandates in addition to the one listed in the chart
above are set forth below:• Chairman of the Board of Directors of DaimlerChrysler• Chairman of the Supervisory Board of SFC Energy AG• Chairman of the Board of Directors of DC UK Holding plc• Member of the Board of Directors of Campus Community

Corporation (DCC) (resigned 3 August 2007);(resigned 1 November 2007);(formerly called SFC Smart Fuel Cell AG);

Parnership Foundation (formerly called J&R Carter
Partnership Foundation);

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1• Member of the Board of Directors of EADSParticipations B.V.; and• Member of the Advisory Board of HUF Hülsbeck & Fürst
GmbH & Co. KG.

Former mandates for the last ﬁve years:•

Chairman of the Board of Directors of SAF-Holland S.A.
(resigned 31 January 2009); and•Chairman of Kuka AG (resigned 18 September 2009).

Dominique D’Hinnin
Mr Dominique D’Hinnin was appointed Co-Managing Partnerof Lagardère SCA in March 2010. He joined Lagardère in 1990
as Advisor to the Chairman of the Finance Committee of theGroup. After that, he held different positions within the Group,
ﬁrst being appointed as Internal Audit Manager, and then CFO
Hachette Livre in 1993, before being appointed Executive Vice
President of Grolier Inc. in the US and Chief Financial Ofﬁcer of
Lagardère SCA in 1998. Mr D’Hinnin is an alumnus of the École
normale supérieure and is an Inspecteur des ﬁnances.
Current mandates in addition to the one listed in the chart
above are set forth below:• Director, Chief Operating Ofﬁcer of Arjil Commandité
Arco S.A.;

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Former mandates for the last ﬁve years:• Chairman and Managing Director of Lagardère Télévision
Holdings S.A. (resigned January 2007);• Administrator of Legion Group S.A. (resigned May 2007);• Director of Lagardère Management, Inc. (resigned
October 2007);• Member of the Supervisory Board of Hachette
Holdings S.A.S. (resigned December 2007);• Member of the Supervisory Board of Financière Pichat S.A.S.
(resigned April 2008);• Chairman of the Supervisory Board of Newsweb S.A.
(resigned June 2008);• Chairman of Eole S.A.S (resigned February 2009);• Member of the Supervisory Board and Chairman of the Audit
Committee of Le Monde S.A. (resigned November 2010);• Vice-Chairman of Atari S.A. (former Infogrames

Entertainment S.A.) and Chairman of the Audit Committeeof Atari S.A. (resigned March 2011);• Member of the Supervisory Board of Lagardère
Sports S.A.S. (resigned May 2011); and•• Administrator of Le Monde Interactif S.A. (resigned
December 2011).
• Administrator of Hachette S.A.;• Member of the Supervisory Board of Lagardère Active S.A.S.; Juan Manuel Eguiagaray Ucelay
Mr Juan Manuel Eguiagaray Ucelay is an economist and• Permanent representative of Hachette S.A. at the
Chairman and Managing Director of Ecrinvest 4 S.A.;

Supervisory Board of Lagardère Active Broadcast;• Administrator of Lagardère Entertainment S.A.S.;• Administrator of Lagardère Services S.A.S;• Administrator of Hachette Livre S.A.;• Administrator of Lagardère Ressources S.A.S.;• Administrator of Sogeade Gérance S.A.S.;• Member of the Supervisory Board of Financière de Pichat &CIE SCA;• Member of the Supervisory Board of Matra Manufacturing &Services S.A.S.;• Chairman of the “Club des Normaliens dans l’Entreprise”;• Member of the Trustee Board and Treasurer of “Fondation del’École normale supérieure”;• Chairman of the “Institut de l’École Nationale Supérieure”;• Permanent representative of Hachette Filipacchi Presse at
the Supervisory Board of Les Editions P. Amaury S.A.;• Member of the Supervisory Board and of the Audit
Committee of CANAL + France S.A.;• Director of Lagardère North America, Inc.;• Member of the Board of Directors of EADSParticipations B.V.; and126 I EADS REGISTRATION DOCUMENT 2011

economic Advisor for various social institutions and privatecompanies. He has been a full time Professor of Economics
at Deusto University in Bilbao (1970-1982), and Associate
Professor of Economics at Carlos III University in Madrid.
Mr Eguiagaray Ucelay holds degrees in economics and law, as
well as a PhD, from Deusto University. Formerly Spain’s Minister
for Public Administration (1991-1993) and Minister for Industry
and Energy (1993-1996), he resigned from Parliament in 2001 to
devote himself to economic and social activities.
Current mandates in addition to the one listed in the chart
above are set forth below:• President of Solidaridad Internacional (NGO);• Member of the Council Adviser of EPTISA (former Fundación
Grupo EP);

• Member of the Council Adviser of Cap Gemini Spain;• Member of the Board of Directors of EADSParticipations B.V.;• Member of the Council Adviser of Siemens S.A.;• Chairman of the Advisory Committee at Fundacion
Alternativas; and• Chairman of an UNESPA mission for social and institutional
initiative.

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Former mandates for the last ﬁve years:• Chairman of Sport Investment Company LLC.

• Member of the Council Adviser of Creation, Advising andFormer mandates for the last ﬁve years:

Development (Creade), S.L. (resigned 1 July 2007); and•Economic Adviser of Arco Valoraciones S.A. (resigned
1 November 2007).

Arnaud Lagardère
Mr Arnaud Lagardère was appointed Managing Partner of
Lagardère SCA in March 2003 and his appointment was
renewed by the Supervisory Board on proposal of the General
Partners on 11 March 2009, for a period of six years to run until
11 March 2015. In addition, Mr Lagardère is the Chairman of
Lagardère SAS and Lagardère Capital & Management SAS. He
and these two companies held 9.62% of Lagardère SCA’s sharecapital on 31 December 2011. Mr Lagardère holds a DEA higher
degree in economics from the University of Paris Dauphine.
He was appointed Director and Chief Executive Ofﬁcer ofthe company MMB, which became Lagardère SCA, in 1987.
He was Chairman of the US Company Grolier Inc. from 1994 to1998.

• Chairman and Chief Executive Ofﬁcer (Président Délégué)of Lagardère Active Broadcast S.A Monégasque (resigned
March 2007);• Member of the Supervisory Board of Lagardère
Sports S.A.S. (resigned April 2007);• Director of Lagardère Management Inc. (resigned
October 2007);• Chairman of the Board of Directors of Lagardère Active North
America Inc. (resigned October 2007);• Chairman of the Supervisory Board of Hachette

Holding S.A.S. (ex Hachette Filipacchi Medias) (resigned
December 2007);• Director of France Télécom S.A. (resigned January 2008);• Member of the Supervisory Board of Virgin Stores S.A.
(resigned February 2008);

Current mandates in addition to the one listed in the chart
above are set forth below:• Member of the Supervisory Board of Le Monde S.A.

• Chairman and Chief Executive Ofﬁcer of Lagardère Media• President (Chief Executive Ofﬁcer) of Lagardère Active• Director of Hachette Livre S.A.;• Chairman of the Supervisory Board of Lagardère• Director of LVMH-Moet Hennessy Louis Vuitton S.A.

(corporate name: Hachette S.A.);

Services S.A.S. (ex Hachette Distribution Services);• Chairman of the Supervisory Board of Lagardère
Active S.A.S.;(resigned February 2008);

Broadband S.A.S. (resigned June 2008);(resigned May 2009);• Permanent Representative of Lagardère Active Publicité
to the Board of Directors of Lagardère Active RadioInternational S.A. (resigned May 2009);• Chairman of the Executive Committee of Lagardère• Member of the Supervisory Board of Daimler AG (resigned• Director of Lagardère Ressources S.A.S.;• President, Lagardère Unlimited Inc.;• Permanent Representative of Lagardère Unlimited INC,

• President of the “Association des Amis de Paris Jean-Bouin

Unlimited S.A.S.;

Managing member of Lagardère Unlimited LLC;

• Chairman and Chief Executive Ofﬁcer of Sogeade
Gérance S.A.S.;•

Member of the Board of Directors of EADSParticipations B.V.;• Chairman of Fondation Jean-Luc Lagardère;• President of the sports association, Lagardère Paris Racing
Ressources (Association loi 1901);• President of the sports association Lagardère Paris Racing(Association loi 1901);• Chairman and Chief Executive Ofﬁcer of Lagardère S.A.S.;• Chairman and Chief Executive Ofﬁcer of Lagardère Capital &Management S.A.S.;• Chairman and Chief Executive Ofﬁcer of Arjil Commanditée –ARCO S.A.; andApril 2010);

C.A.S.G.” (Association loi 1901) (resigned September 2010);
and• Chairman of the Supervisory Board of Lagardère
Sports S.A.S. (resigned May 2011).

Hermann-Josef Lamberti
Mr Hermann-Josef Lamberti is a member of the Management
Board of Deutsche Bank AG since 1999 and is the bank’s Chief
Operating Ofﬁcer. From 1985, he held various management
positions within IBM, working in Europe and the US, in the ﬁeldsof controlling, internal application development, sales, personal
software, marketing and brand management. In 1997, he wasappointed Chairman of the Management of IBM Germany.
He started his career in 1982 with Touche Ross in Toronto,
before joining the Chemical Bank in Frankfurt. Mr Lamberti
studied business administration at the Universities of Cologne
and Dublin, and graduated with a Master’s degree.
Current mandates in addition to the one listed in the chart
above are set forth below:• Member of the Supervisory Board of BVV Pensionsfonds desBankgewerbes AG;

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1• Member of the Supervisory Board of BVV

Versicherungsverein des Bankgewerbes A.G. und BVV
Versorgungskasse des Bankgewerbes e.V.;• Member of the Supervisory Board of Carl Zeiss AG;• Member of the Supervisory Board of Deutsche Börse AG;• Member of the Supervisory Board of Deutsche Bank
Privat-und Geschäftskunden AG;• Member of the Board of Management of Arbeitgeberverband
des privaten Bankgewerbes e:V.;

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Universitätsgesellschaft Bonn-Freunde, Förderer, Alumni;• Member of the Advisory Board in the centre for marketorientated corporate management of WHU;

• Member of the Steering Committee and of the Federal
Committee of Wirtschaftsrat der CDU e.V.;• Member of the Commission of

Börsensachverständigenkommission(Bundesﬁnanzministerium);• Member of the Advisory Board of Barmenia Versicherungen• Member of the Management Board and Member of the• Deputy member of the Deposit Insurance Committee of• Member of the Advisory Board of Franhofer-IUK-Verbund;• Member of the University Council of the University ofWuppertal;

Bundesverband deutscher Banken e:V.;• Delegate of the Delegates’ Assembly of the Deposit
Insurance Committee of Bundesverbank deutscher
Banken e.V.;

Executive Committee of Frankfurt Main Finance e.V.;

Cologne;• Member of the Board of Directors of Stichting
Administratiekantoor EADS;• Member of the Financial Community Germany Committee of• Member of the Board of Directors of Wirtschaftsinitiative• Member of the Board of Management of Deutsches• Member of the Executive Committee and of the Steering• Member of the Board of Trustees of e-Finance Lab Frankfurt• Member of the Senate of acatech – Deutsche Akademie der• Member of the Stock Exchange Council of Eurex• Member of the Board of Directors of American Chamber of• Member of the Stock Exchange Council of Frankfurter• Member of the Board of Trustees of Hanns Martin Schleyer-• Chairman of the Society of Freunde der Bachwoche• Member of the Editorial Board of scientiﬁc journal• Member of the Board of Trustees of Institute for Law and• Member of the International Advisory Board of IESE Business• Member of the Advisory Board of Institut für• Member of the Board of Trustees of Johann Wolfgang

Bundesverband deutscher Banken e.V.;
Aktieninstitut e.V.;
am Main;

Deutschland;

Wertpapierbörse AG;
Ansbach e.V.;

Finance Frankfurt;

Unternehmensplanung - IUP;

• Member of the Board of Trustees of Junge Deutsche
Philharmonie;• Deputy Chairman of the Board of Trustees of the Society ofPromotion of Kölner Kammerorchester e.V.;• Member of the Programme Advisory Board of LOEWE

Landes-Offensive zur Entwicklung Wissenschaftlichökonomischer Exzellenz des Hessischen Ministeriums fürWissenschaft und Kunst;•• Deputy member of the Advisory Board of Prüfungsverband
Member of the Advisory Circle of Münchner Kreis;deutscher Banken e.V.;•

Member of the Board of Trustees of The Frankfurt
International School e.V.;•

Member of the Managing Committee of the Institut fürWirtschaftsinformatik der HSG of the Universität St. Gallen;

128 I EADS REGISTRATION DOCUMENT 2011

FrankfurtRheinMain e.V.;

Committee of Frankfurt RheinMain e.V.;
Technikwissenschaften e.V.;
Commerce in Germany;
Stiftung;„Wirtschafstinformatik“;

School, University of Navarra;

Goethe-Universität Fachbereich Wirtschaftswissenschaften;
and• Member of the Board of Trustees of Stiftung Lebendige
Stadt.

Former mandates for the last ﬁve years:• Member of the Board of Directors of Fiat S.p.A. (resigned
24 July 2007);• Member of the Verband der Sparda-Banken e.V. (resigned
30 September 2007);• Member of the Foundation Board of Otto A. WipprechtStiftung (resigned 31 May 2008);• Member of the Advisory Board of Universität Augsburg(resigned 30 September 2008);• Executive Customer of the Advisory Council of Symantec
Corporation (resigned 12 May 2010);

CORPORATE GOVERNANCE
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1• Member of the Board of Trustees of Baden-Badener

Unternehmergespräche - Gesellschaft zur Förderung desUnternehmensnachwuchses e.V. (resigned 13 May 2010);• Member of the Board of Trustees of Wallraf-Richartz-Museum
und Museum Ludwig e.V. (resigned 31 January 2011);• Member of the Founder Council of Wallraf-Richartz-Museum(resigned 31 January 2011); and• Member of the Senate of Fraunhofer Gesellschaft. (resigned
31 December 2011).

Lakshmi N. Mittal
Lakshmi N. Mittal is the Chairman and CEO of ArcelorMittal.
He founded Mittal Steel Company in 1976 and led its 2006
merger with Arcelor to form ArcelorMittal, the world’s largest
steel maker. He is widely recognised for his leading role inrestructuring the global steel industry, and has over 35 years’
experience working in steel and related industries. Among
his manifold mandates, Mr Mittal is Member of the Board of
Directors of Goldman Sachs, of the World Economic Forum’s
International Business Council, and of the Advisory Board of
the Kellogg School of Management. Furthermore, he has been
awarded numerous recognitions from international institutions
and magazines and is closely associated with a number of notfor-proﬁt organisations.

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Former mandates for the last ﬁve years:• Member of the International Advisory Board of Citigroup(resigned June 2008);• Member of the Board of Directors of ICICI Bank Limited(resigned May 2010);• Member of the Board of Commonwealth Business Council
Limited (resigned February 2011);• Member of the Business Council (resigned December 2011);
andCurrent mandates in addition to the one listed in the chart
above are set forth below:• Member of the Managing Committee of Lakshmi Niwas and• Chairman of the Board of Directors and CEO of

Sir John Parker

ArcelorMittal S.A.;•• Member of the Board of Directors of Goldman Sachs;• Member of the Executive Committee of World Steel
Chairman of the Board of Directors of Aperam S.A.;

Association (earlier named International Iron and SteelInstitute);• Member of the World Economic Forum’s International
Business Council;• Member of the Foreign Investment Council in Kazakhstan;• Member of the Prime Minister of India’s Global Advisory
Council;• Member of the Presidential International Advisory Board ofMozambique;• Member of President’s Domestic and Foreign Investors
Advisory Council, Ukraine;• Member of the Advisory Board of the Kellogg School ofManagement;• Member of Board of Trustees of Cleveland Clinic;• Member of Executive Board of Indian School of Business;• Gold Patron of Prince’s Trust;• Member of the Board of ArcelorMittal USA Inc.;• President of Ispat Inland ULC;

Usha Mittal Foundation (resigned December 2011).

Sir John Parker is Chairman of Anglo American PLC, Deputy
Chairman of DP World (Dubai), Non-Executive Director ofCarnival PLC and Carnival Corporation. He stepped down
as Chairman of National Grid PLC in December 2011.
His career has spanned the engineering, shipbuilding anddefence industries, including some 25 years’ experience as a
Chief Executive Ofﬁcer with Harland & Wolff and the Babcock
International Group. He also chaired at the Court of the Bankof England between 2004 and 2009. Sir Parker studied Naval
Architecture and Mechanical Engineering at the College ofTechnology, Queens University, Belfast.
Current mandates in addition to the one listed in the chart
above are set forth below:• Director of Carnival plc and Carnival Corporation;• Deputy Chairman of D.P. World (Dubai);• Director of White Ensign Association Limited;• Member of the Board of Directors of Stichting
Administratiekantoor EADS;• President of the Royal Academy of Engineering; and• Visiting fellow of the University of Oxford.
Former mandates for the last ﬁve years:• Senior Non-Executive Director of Bank of England (resigned
June 2009);• Joint Chairman Mondi Group (resigned August 2009); andEADS REGISTRATION DOCUMENT 2011 I 129

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1• Chancellor of the University of Southampton (resigned
July 2011);• Member of the International Advisory Board of Citigroup(dissolved December 2011); and• Chairman of National Grid PLC (resigned January 2012).
Michel Pébereau
Mr Michel Pébereau was BNP Paribas’ Chairman of theBoard between 2003 and December 2011. He presided overthe merger that created BNP Paribas in 2000, becoming
Chairman and Chief Executive Ofﬁcer (CEO). In 1993, he wasappointed Chairman and CEO of the Banque Nationale deParis and privatised it. Previously, he was Chairman and CEOof the Crédit Commercial de France. He started his careerin 1967 at the Inspection Générale des Finances. In 1970 hejoined the French Treasury where he held various high ranking
posts. Mr Pébereau is an alumnus of the École nationaled’administration and of the École polytechnique.

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Wilfried Porth
Mr Wilfried Porth is a Member of the Board of Management ofDaimler AG and the Director of Labor Relations, responsiblefor Human Resources, IT-management and Procurement of
Non-Production Material and Services. Until 2006, he was
Executive Vice President, MB Van and prior to that, he was
Chief Executive Ofﬁcer of Mitsubishi Fuso Truck & Bus Corp.
He previously held various engineering management positions
within the Daimler Group, including several years of experienceabroad. Mr Porth graduated in engineering at the University of
Stuttgart.
Current mandates in addition to the one listed in the chart
above are set forth below:• Member of the Supervisory Board of Daimler Financial
Services AG;• Member of the Board of Directors of EADSParticipations B.V.; andCurrent mandates in addition to the one listed in the chart
above are set forth below:• Chairman of the Board of Trustees of Hanns Martin Schleyer• Member of the Board of Directors of BNP Parisbas;• Member of the Board of Directors of Compagnie de Saint-

Former mandates for the last ﬁve years:

Gobain;• Member of the Board of Directors of Total;• Member of the Board of Directors of Pargesa Holding S.A.,
Switzerland;• Member of the Board of Directors of BNP Paribas S.A.,
Switzerland;

Stiftung.

• Member of the Advisory Board of Westfalia Van Conversion
GmbH (resigned November 2007);• Member of the Supervisory Board of Mercedes-Benz
Ludwigsfelde GmbH (resigned March 2009);• Member of the Advisory Board of Mercedes-Benz
España, S.A. (resigned June 2009);• Member of the Board of Directors of Daimler Vans
Manufacturing, LLC (resigned August 2009); and• Member of the Board of Directors of Axa;
• Ofﬁcer of Daimler Vans Manufacturing, LLC (resigned• Member of the Supervisory Board of Banque Marocaine pour
August 2009).
le Commerce et l’Industrie, Morocco;• Censor of Galeries Lafayette S.A.;• Chairman of the Management Board of Institut d’études
Politiques de Paris;• Member of the Supervisory Board of Institut Aspen France;• Member of the Executive Committee of the Institut de•

Independent Directors
The four independent Directors appointed pursuant to thecriteria of independence set out above are Hermann-Josef
Lamberti, Lakshmi N. Mittal, Sir John Parker and Michel
Pébereau.

l’Entreprise;

Prior Offences and Family Ties

Member of the Executive Committee of Mouvement desEntreprises en France; andTo the Company’s knowledge, none of the Directors (in either
their individual capacity or as director or senior manager of
any of the entities listed above) has been convicted in relation
to fraudulent offences, been the subject of any bankruptcy,
receivership or liquidation, nor been the subject of any ofﬁcial
public incrimination and/or sanction by a statutory or regulatory
authority, nor been disqualiﬁed by a court from acting as amember of the administrative, management or supervisory
bodies of any issuer or conduct of affairs of any company,
during at least the last ﬁve years. As of the date of thisdocument, there are no family ties among any of the Directors.

• Member of the “Académie des sciences morales etpolitiques”.

Former mandates for the last ﬁve years:• Member of the Board of Directors of EADS Participations B.V.
(resigned 22 October 2007);• Member of the Board of Directors of Lafarge (resigned
12 May 2011); and• Chairman of the Board of Directors of BNP Paribas (resigned
1 December 2011).

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4.1.1.2 Operation of the Board of Directors
in 2011
Board Meetings
The Board of Directors met nine times during 2011 and wasregularly informed of developments through business reports
from the Chief Executive Ofﬁcer, including rolling forecasts aswell as strategic and operational plans. The average attendance
rate at such meetings improved to 86%.
Throughout 2011, the Board of Directors monitored the progressof signiﬁcant programmes, such as A350 XWB, A320neo,
A400M, A380, Ariane 5, Paradigm, Euroﬁghter, Talarion, andSaudi Border Security. It was kept regularly informed about theA350 XWB programme development progress and reviewed thestatus of the programme management improvement initiative
throughout the Group.
Furthermore, the Board of Directors addressed EADS’ strategy(including the competitive environment and M&A strategy) andin line with the objectives set forth in the Vision 2020 approved
the acquisitions of Vector Aerospace, Satair and Vizada, whichstrengthened EADS’ position internationally in general and in theservices market segment in particular.
The Board also focused on possible consequences resulting
from the European sovereign debt crisis, the Group’s ﬁ nancial
results and forecasts, asset management, compliance in
key business processes, and efﬁ ciency and innovation
initiatives. It reviewed Enterprise Risk Management results,
export control regulations, investor relations and ﬁ nancial
communication policy, and legal risks. Moreover, the Board
discussed further actions for the improvement of EADS
employee engagement.
Finally, the Board of Directors focused on governance issues
and succession planning in order to facilitate a smooth
Board of Directors and management transition in 2012.
The recommendations for the appointments were prepareddiligently by the Board, applying the succession process under
the governance of EADS, which was updated in October 2007.
The process aims at identifying the best possible candidates
for the composition of the Board of Directors as well as the top
executive management positions. See “— 1. Information on
EADS’ Activities — 1.2 Recent Developments”.

Board Self-Assessment
The Board of Directors carries out a self-assessment of its
performance annually, and a more thorough assessment isconducted every three years by independent consultants (asoccurred in 2010). The Corporate Secretary conducted thelatest self-assessment in early 2012, based on one-to-one
discussions with each Director. This self-assessment exploredthe role of the Board of Directors, its operations, whether it fulﬁls
its mission, how its composition is suited to EADS’ strategy,
and the documentation and processes that inﬂuence its
performance.
The Directors consider the frequency and length of meetings
as adequate to cover all issues; meetings for speciﬁc decisions
outside regular Board meetings and the travel constraints

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make EADS Board Membership demanding. Supporting
documentation has further improved and is well focused tosupport decision-making, while remaining quite detailed.
Information provided at meetings is adequate for the complexityof the business. The time to debate during meetings is
satisfactory, particularly because Directors come well prepared.
The Directors unanimously ﬁnd that the Board of Directors has
matured; its work as a team is efﬁcient, allowing it to explore
new domains and tackle relevant matters in the best interestof the Group, very openly and professionally. Discussions
are uninhibited and differing views are both encouraged andconstructive. The Directors feel that the Board work allows
them to fulﬁl their ﬁduciary duty. Moreover, the working
relationship between the Board of Directors and the membersof the Executive Committee is smooth and efﬁcient, due tothe experience of mutual exchanges. Occasional meetings on
industrial sites are considered beneﬁcial and the practice will be
continued.
Overall, the Board of Directors considers it assembles a very
international, diverse and relevant set of skills, with a strongemphasis on ﬁnance competencies, and global strategic
experience. In 2011, these skills were applied to discussing the
A400M and A380 stabilisation, the A350 XWB technical andcommercial de-risking, the A320neo launch, a major aircraft
provision contract, large acquisitions, results of the overhaul ofthe executive remuneration system, upholding defence activities
in times of downward pressure on defence and public spending,regional and segment strategy, and succession planning.
Attention to compliance permeates the work of the Board of
Directors.
Directors sense that the Board of Directors is less absorbed
by pressing programme challenges and short-term issues atthe expense of the longer-term view. The majority of Board
Members are satisﬁed that more time was devoted to long leadquestions in 2011. For the third time, the Board of Directors
devoted a full day meeting to strategy in 2011, including anassessment of speciﬁc country strategies, and the competitive
landscape in certain industry segments.
Committees are very thorough and professional, and thearticulation of the Audit Committee and of the Remuneration
and Nomination Committee with the rest of the Board of
Directors is satisfactory; Committee meetings are often held on
dates separate from the Board of Directors’ meeting. The resultof most Committees’ work is deemed helpful by the whole
Board of Directors to prepare its decisions, as they focus moreon special and technical issues, to avoid repetition of work.
Ideas for the further improvement of the Strategic Committee
work have been proposed to enhance its relevance to the Boardof Directors. Finally, the Chairmanships of the Board of Directors
and the Committees are recognised as very competent anddedicated.
Meeting attendance for the Board of Directors as a whole,and for the Remuneration and Nomination Committees has
improved, and it is considered adequate to allow a constant andinformed debate over matters. Individual attendance has also
improved substantially.

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Since the last self-assessment, in 2011, the discussions
concerning ﬁnancial strategy in the light of the European
sovereign debt crisis, succession planning, organisational
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shareholder divestment are the most tangible improvements.
Continuous improvement, competitiveness and effectiveness ofgovernance and management of the Group will remain a prime
focus and key success factor for EADS.

4.1.2 Board Committees
4.1.2.1 Summary of memberships 2011
In 2011, membership on Board Committees was as follows:
Director

Audit Committee

Remuneration & Nomination Committee

Bobo Uebber (Chairman)

Strategic Committee

ChairmanLouis Gallois (CEO)X

Rolf Bartke

X

Dominique D’Hinnin

X

X

ChairmanX

X

Chairman

Juan Manuel Eguiagaray Ucelay
Arnaud Lagardère
Hermann-Josef LambertiX

Lakshmi N. Mittal
Michel PébereauX

Sir John Parker
Wilfried Porth
Number of meetings held (attendance rate)

5 (85%)

4.1.2.2 Audit Committee
Pursuant to the Rules, the Audit Committee makes
recommendations to the Board of Directors on the approvalof the annual ﬁnancial statements and the interim (Q1, H1, 9M)
accounts, as well as the appointment of external auditors andthe determination of their remuneration. Moreover, the Audit
Committee has the responsibility for ensuring that the internaland external audit activities are correctly directed and that
audit matters are given due importance at meetings of theBoard of Directors. Thus, it discusses with the auditors theiraudit programme and the results of the audit of the accounts
and it monitors the adequacy of the Group’s internal controls,
accounting policies and ﬁnancial reporting. It also oversees
the operation of the Group’s ERM system and the Compliance
Organisation. The rules and responsibilities of the Audit
Committee have been set out in the Audit Committee Charter.
The Chairman of the Board of Directors and the Chief Executive
Ofﬁcer are invited as guests to each meeting of the Committee.
The Chief Financial Ofﬁcer and the Head of Accounting arerequested to attend meetings of the Audit Committee to defend
management proposals and to answer questions.
The Audit Committee is required to meet at least four times
a year. It met ﬁve times during 2011, with an 85% averageattendance rate. In 2011, the Audit Committee performed all of
the above listed activities.

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X

X

4 (94%)

3 (80%)

4.1.2.3 Remuneration and Nomination
Committee
Pursuant to the Rules, the Remuneration and Nomination
Committee makes recommendations to the Board of Directors
regarding the appointment of members of the Executive
Committee (upon proposal by the CEO and approval by the
Chairman); the EADS Corporate Secretary; the members of
the Airbus Shareholder Committee; and the chairmen of theSupervisory Board (or similar organ) of other important Group
member companies and Business Units. The Remuneration
and Nomination Committee also makes recommendations
to the Board of Directors regarding remuneration strategies
and long-term remuneration plans and decides on the service
contracts and other contractual matters in relation to the Boardof Directors and Executive Committee Members. The rules andresponsibilities of the Remuneration and Nomination Committee
have been set out in the Remuneration and Nomination
Committee Charter.
The guiding principle governing management appointments in
the Group is that the best candidate should be appointed tothe position (“best person for the job”), while at the same timeseeking to achieve a balanced composition with respect togender, experience, national origin, etc. The implementation ofthese principles should, however not create any restrictions on
diversity within the EADS executive management team.

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The Chairman of the Board of Directors and the Chief Executive
Ofﬁcer are invited as permanent guests to each meeting of theCommittee. The Head of EADS Human Resources is requested
to attend meetings of the Remuneration and Nomination
Committee to defend management proposals and to answer
questions.
The Remuneration and Nomination Committee is required
to meet at least twice a year. It met four times during 2011,
with a 94% average attendance rate. In addition to making
recommendations to the Board of Directors for major
appointments within the Group, the Remuneration and
Nomination Committee reviewed top talents and succession
planning, discussed measures to improve engagement and topromote diversity, reviewed the remuneration of the Executive
Committee Members for 2011, the long-term incentive plan,and the variable pay for 2010. Based on the outcome of the freeshare plan, it also proposed the terms of the 2012 ESOP plan.

4.1.2.4 Strategic Committee
The Strategic Committee is not a decision-making body but aresource available to the Board of Directors for the preparationof decisions on strategic matters. Pursuant to the Rules, the

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Strategic Committee makes recommendations to the Boardof Directors regarding strategic developments, corporate
strategies, major merger and acquisition projects, major
investments or divestments, projects or product decisions, aswell as major research and development projects. The rules andresponsibilities of the Strategic Committee have been set out in
the Strategic Committee Charter.
The Strategic Committee is required to meet at least twicea year. The Chief Executive Ofﬁcer is a member and theChief of the EADS Marketing and Sales Organisation is apermanent guest of the Strategic Committee in order todefend management proposals and to answer questions.
The Committee met three times during 2011, with an 80%
average attendance rate.
In addition to monitoring major strategic and divisional
initiatives, acquisition targets and divestment candidates,and progress on the top priorities of the Group for the year, it
made recommendations to the Board of Directors linked to thecompetitive landscape and home countries industrial policy,
company perception in key markets, the continuous constraints
on defence budgets, and conducted a review of several country
strategies.

4.1.3 Executive Committee
The Chief Executive Ofﬁcer, supported by an Executive
Committee (the “Executive Committee”), is responsible formanaging the day-to-day operations of the Company. The
Executive Committee, chaired by the Chief Executive Ofﬁcer,
also comprises the Heads of the major Functions and Divisionsof the Group. The Executive Committee met 11 times during
2011.
The following matters are discussed, amongst others, at the
Executive Committee meetings:
O appointment approvals of their management teams by theheads of the Group Divisions (with the exception of the Airbus
Chief Operating Officer);
O investment approvals up to € 350,000,000;
O setting up and control of the implementation of the strategy
for EADS businesses;
O management, organisational and legal structure of the Group;
O performance level of the Group’s businesses and support
functions; andO all business issues, including the operational plan of theGroup and its Divisions and Business Units.
The internal organisation of the Executive Committee is deﬁned
by the business allocation among the members under thesupervision of the Chief Executive Ofﬁcer. Notwithstanding
the joint responsibilities as deﬁned above, each member ofthe Executive Committee is individually responsible for the
management of his portfolio and must abide by decisions takenby the Chief Executive Ofﬁcer and the Executive Committee, as
the case may be.
The Chief Executive Ofﬁcer endeavours to reach consensus
among the members of the Executive Committee on thematters discussed at the Executive Committee meetings. In theevent a consensus is not reached, the Chief Executive Ofﬁcer
is entitled to decide the matter. If there is a fundamental orsigniﬁcant disagreement with respect to any undecided matter,the dissenting Executive Committee Member may request that
the Chief Executive Ofﬁcer submit such matter to the Chairman
for his opinion.
The Executive Committee Members are appointed by the Boardof Directors on the proposal of the Chief Executive Ofﬁcer ﬁrst
approved by the Chairman after review by the Remuneration
and Nomination Committee. The appointment of the Executive
Committee should be approved as a whole team, not on an
individual basis, with the exception of the Chief Executive Ofﬁcerof Airbus, who shall be appointed by the Board of Directors
individually. The term of ofﬁce for the Executive Committee
Members is ﬁve years.

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Composition of the Executive Committee
Name

Age

Current Term started

Term expires

Principal Occupation

Louis Gallois

68

2007

2012

Chief Executive Officer of EADS

François Auque

55

2010

2015

Astrium CEO/Coordination of Space & Defence

Lutz Bertling

49

2011

2016

Eurocopter CEO

Jean J. Botti

54

2011

2016

Chief Technical Officer of EADS

Fabrice Brégier

50

2007

2012

Airbus COO/EADS Operational Performance

Thomas Enders

53

2007

2012

Airbus CEO

Jussi Itävuori

56

2008

2012

Head of EADS’ Human Resources

Marwan Lahoud

45

2007

2012

Chief Strategy and Marketing Officer of EADS

Sean O’Keefe

56

2010

2014

EADS North America CEO

Hans Peter Ring

61

2007

2012

Chief Financial Officer of EADS

Domingo Ureña-Raso

53

2009

2014

Head of Airbus Military

Stefan Zoller

54

2010

2015

Cassidian CEO

Note: Status as of 1 March 2012. The professional address of all members of the Executive Committee for any matter relating to EADS is Mendelweg 30, 2333 CS Leiden, The Netherlands.

Louis Gallois, Chief Executive Officer of EADS

Fabrice Brégier, EADS Operational PerformanceSee “— 4.1.1 Board of Directors, Chairman and Chief Executive
Ofﬁcer — Curriculum Vitae and other Mandates and Duties
Performed in any Company by the Members of the Board of
Directors”.

Mr Brégier was appointed Airbus COO in 2006, with additional
responsibility for EADS operational performance. He became
President and Chief Executive Ofﬁcer (CEO) of Eurocopter
in 2003. Previously, he was CEO of MBDA. He joined Matra
Défense in 1993 as Chairman of the Apache MAW andEurodrone GIEs. He is alumnus of École Polytechnique andÉcole des Mines.

François Auque, Astrium CEO and Coordinationof Space & Defence
Mr Auque was appointed in 2000. He was previously Chief
Financial Ofﬁcer (CFO) of Aerospatiale then Aerospatiale Matraand Managing Director for satellites of Aerospatiale Matra. He
spent his earlier career with the Suez Group and the French
Cour des comptes. Mr Auque graduated from École des Hautesétudes commerciales, Institut d’études politiques and is analumnus of École nationale d’administration.

Lutz Bertling, Eurocopter CEO
Mr Bertling was appointed in 2006. Coming from the Defence& Security Division, he joined Eurocopter in 2003 as Executive
Vice President Governmental Programmes and became CEO of
Eurocopter Deutschland in early 2006. Previously, Mr Bertlingheld various positions at DaimlerChrysler Rail Systems andBraunschweig University. He earned a PhD in Engineering at the
Braunschweig University.

Jean J. Botti, Chief Technical Officer
Mr Botti was appointed as CTO in 2006. He joined from General
Motors, where he was Chief Technologist and then BusinessLine Executive of the Delphi Powertrain business. He started his
career in 1978 as product engineer for Renault. Mr Botti holds
a degree from INSA Toulouse, an MBA from Central Michigan
University and a PhD from the Conservatoire des Arts et Métiersand completed the course of Research and Development
Management at the Massachusetts Institute of Technology(MIT). Mr Botti is an SAE fellow as well as a member of theFrench Academy of Technology and a member of the European
Research Advisory Board (ERAB).

134 I EADS REGISTRATION DOCUMENT 2011

Thomas Enders, Airbus CEO
Mr Enders, Chief Executive Ofﬁcer of Airbus since 2007, studied
Economics, Political Science and History at the University ofBonn and at the University of California in Los Angeles. Prior tojoining the aerospace industry in 1991 (Messerschmitt-BölkowBlohm), he worked, inter alia, as a member of the Planning Staffof the German Minister of Defence. At MBB and subsequently
DASA he held various positions, including Chief of Staff, Director
Corporate Development & Technology, and Head of Defence
Systems. Following the creation of EADS in 2000, he wasappointed CEO of the EADS Defence and Security Systems
Division, holding this position until 2005 when he was appointed
co-CEO of EADS. Mr Enders has been President of BDLI
(German Aerospace Industry Association) since 2005.

Jussi Itävuori, Head of Human Resources
Mr Itävuori joined EADS in 2001 and became a member of the
Executive Committee in 2003. Previously, he had worked for
KONE Corporation from 1982, being appointed Head of Human
Resources and member of the Executive Committee of KONE
Corporation in 1995. Mr Itävuori graduated from the Vaasa
School of Economics, Finland in 1982.

Marwan Lahoud, Chief Strategy and Marketing
Officer
Mr Lahoud was appointed in June 2007. Previously, he was
CEO of MBDA. He worked for Aerospatiale on its merger with
Matra and on the foundation of EADS. Within EADS, he served
as Senior Vice President Mergers & Acquisitions. Mr Lahoud

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is an alumnus of École Polytechnique and graduated from the
École Nationale Supérieure de l’Aéronautique et de l’Espace.

Sean O’Keefe, EADS North America CEO
Mr O’Keefe was appointed to the Executive Committee in 2010.
Previously, he was a Corporate Ofﬁcer of the General ElectricCompany. Before joining GE, he held several public service
positions as Chancellor of the Louisiana State University, NASA
Administrator, Deputy Director of the federal budget at theWhite House, Secretary of the US Navy and CFO of the US
Department of Defence. Between public service appointments,
he held professorships at US universities. Mr O’Keefe earned
academic degrees from Syracuse University and Loyola
University, and has been awarded ﬁve honorary doctoral
degrees.

Hans Peter Ring, Chief Financial Officer
Since his appointment in 2002 Mr Ring is the CFO of EADS.
In addition he was acting as a Chief Operating Ofﬁcer (20052007) and Airbus CFO (2007-2008). In 1996, he was made

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Senior Vice President of Controlling at DASA and, subsequently,
EADS. From 1992, he was CFO and Board Member of Dornier
Luftfahrt. He holds a degree in Business Administration from the
University of Erlangen-Nuremberg.

Domingo Ureña-Raso, Head of Airbus Military
Mr Ureña-Raso was appointed in February 2009. He waspreviously in charge of the Power8 and “Future EADS”
programmes. Since 1989, he has held various positions,amongst others at CASA, EADS PZL, Defence & Security
Division and Airbus. Mr Ureña-Raso holds degrees from the
Polytechnic University of Madrid, from ESSEC in Paris and has
an MBA.

Stefan Zoller, Cassidian CEO
Mr Zoller was appointed in 2005, having held top management
positions within the Division since 2000. Previously, he held
various management positions within DASA, DaimlerChrysler,
Dornier and Senstar/Canada. Mr Zoller graduated from the
University Tübingen and holds a PhD.

4.1.4 Enterprise Risk Management System
Risk and opportunity management is of paramount importance
to EADS, given the complex and volatile business environment
in which EADS operates. A comprehensive set of risk andopportunity management procedures and activities across
EADS makes up the EADS Enterprise Risk Management(“ERM”) system.
The objective of the ERM system is to create and preserve
value for EADS’ stakeholders. It is designed and operated
to effectively identify potential events that may affect EADS,
manage risk to be within the deﬁned risk tolerance, identify
and manage opportunities, and provide reasonable assurance
regarding the achievement of targets. To achieve this, EADS
seeks to have one integrated, consistent, comprehensive,
efﬁcient and transparent ERM system, using the sameunderstanding, practice and language. It seeks to embed therisk management philosophy into EADS culture, in order tomake risk and opportunity management a regular and everyday
process for employees.
The Board of Directors and EADS top management regard
ERM as a key management process to steer the Company
and enable management to effectively deal with risks andopportunities. The advanced ERM capabilities and organisationthat EADS is seeking to progressively implement can provide acompetitive advantage to the extent they successfully achieve
the following:O strategy: the selection of high level strategic objectives,supporting the EADS vision and consistent with risk appetite;
O operations: the effectiveness and efficiency of operations
and resource allocation; the delivery of products on timeand in accordance with cost and quality objectives; thecapability to achieve performance and financial targets;the implementation of risk-enabled decisions and managerial
processes;
O reporting: reliability of reporting, in particular financial
reporting; andO compliance: compliance with applicable laws andregulations.

4.1.4.1 ERM Process
The objectives, principles and process for the ERM system
as endorsed by the Board of Directors are set forth in the
EADS ERM Policy and communicated throughout the Group.
The EADS ERM Policy is supplemented by various manuals,
guidelines, handbooks, etc. The ERM system is based on theInternal Control and Enterprise Risk Management Frameworkof the Committee of Sponsoring Organisations of the Treadway
Commission (COSO II). External standards that contribute to
the EADS ERM system include the Internal Control and ERM
frameworks of COSO, as well as industry-speciﬁc standards as
deﬁned by the International Standards Organisation (ISO).
The ERM system comprises an integrated hierarchicalbottom-up and top-down process to enable better management
and transparency of risks and opportunities. At the top, theBoard of Directors and the Audit Committee discuss majorrisks and opportunities, related risk responses and opportunity
capture as well as the status of the ERM system, including
signiﬁcant changes and planned improvements. This is basedon systematic bottom-up information including management
judgement. The results are then fed back into the organisation.
The design of the ERM system seeks to ensure compliance withapplicable laws and regulations with respect to internal control(“IC”) and risk management (“RM”), addressing both subjects inparallel.
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The ERM process consists of four elements: the operational
process, which consists of a sequence of eight consistent,
standardised components to enhance operational risk andopportunity management; the reporting process, whichcontains procedures for the status reporting of the ERM systemand the risk/opportunity situation; the compliance process,which comprises procedures to substantiate the assessmentof the effectiveness of the ERM system; and the support
process, which includes procedures to increase the quality andprovide further substantiation of the quality of the ERM system.
The ERM process applies to all possible sources of risks
and opportunities, with both internal and external sources,
quantiﬁable and unquantiﬁable, potentially affecting EADSin the short-, middle- and long-term. It also applies to all of
EADS’ businesses, activities and departments. Management
at each level discusses ERM when they run the business, aspart of their decision-making and related activities. Accordingly,
the ERM process is part of the management process andinterrelated with other processes. The details of application of
the ERM process vary with the risk appetite of management
and the size, structure and nature of the organisational unit,
programme/project, department or process. Nonetheless, thefundamental principles of the EADS ERM Policy generally apply.
For a discussion of the main risks to which the Group is
exposed, see “Risk Factors”.

4.1.4.2 ERM Governance and Responsibility
The governance structure and related responsibilities for the
ERM system are as follows:
O the Board of Directors supervises the design andeffectiveness of the ERM system including management
actions to mitigate the risks inherent in EADS’ businessactivities. It discusses the major risks at least quarterly
based on ERM reporting or as required depending on
development of business risks. It is supported by the Audit
Committee, which discusses at least yearly the activities
with respect to the operation, design and effectiveness of
the ERM system, as well as any significant changes andplanned improvements prior to presentation to the full Boardof Directors;
O the EADS Chief Executive Officer, backed by the Executive
Committee, is responsible for an effective ERM system, therelated internal environment (i.e. values, culture) and risk
philosophy. He is supported by the EADS Chief Financial
Officer who supervises the EADS Chief Risk Officer and the
ERM system design and process implementation;

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O the EADS Chief Risk Officer has primary responsibility for the
ERM strategy, priorities, system design, culture development
and reporting tool. He supervises the operation of the ERM
system and is backed by a dedicated risk management
organisation on Group and Division level, which actively
seeks to reduce overall risk criticality. This risk management
organisation is networked with the risk owners on the
different organisational levels and pushes for a proactive risk
management culture; andO the executive management of the Divisions, Business Units
and Headquarters’ departments assume responsibility
for the operation and monitoring of the ERM system intheir respective area of responsibility. They seek to ensuretransparency and effectiveness of the ERM system andadherence to its objectives. They take responsibility for the
implementation of appropriate response activities to reduce
probability and impact of risk exposures, and conversely forthe implementation of appropriate responses to increaseprobability and impact of opportunities.

4.1.4.3 ERM Effectiveness
The EADS ERM system needs to be effective. EADS has
established recurring ERM self-assessment mechanisms, to be
applied across EADS. This seeks to allow EADS to reasonably
assure the effectiveness of its ERM system. The ERM
effectiveness assurance comprises:
O ERM process: needs to be present and functioning
throughout EADS without any material weaknesses andneeds to fulfil the EADS ERM Policy requirements;
O risk appetite: needs to be in accordance with the EADS risk
environment;
O ERM IC system: needs to have an effective IC system for the
ERM process in place.
For the coverage of all of its activities, EADS has deﬁned
20 high level business processes. In order to achieve ERM
effectiveness, the ERM process as an overlaying process
must be an integral part of these business processes. ERM
effectiveness is assured if the achievement of the ERM process
objectives is secured by adequate ERM controls which areoperating effectively throughout the organisation and are within
the respective risk appetite level.
Operating effectiveness is measured inter alia by assessing any
potential major failings in the ERM system which have been
discovered in the business year or any signiﬁcant changes
made to the ERM system.

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

ERM control with explanations

Board of Directors/Audit Committee

Regular monitoring
The Board of Directors and the Audit Committee review, monitor and supervise the ERM system.

Top Management

ERM top management discussions
This control is the most important step of the ERM compliance process. All results of the risk
management, self-assessment and confirmation procedures are presented by the Divisions or
Business Units to top management and discussed and challenged at EADS CEO/CFO level.

Management

ERM confirmation letter procedure
Entities and processes/departments heads that participate in the annual ERM compliance
procedures need to sign ERM confirmation letters, especially on internal control effectivenessand deficiencies or weaknesses. The scope of participants is determined by aligning coverageof EADS business with management’s risk appetite.

ERM department

ERM effectiveness measurement
Assess ERM effectiveness by performing operational risk management for the ERM process,benchmarks, etc.

Corporate Audit

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

Compliance

Alert System
Provide evidence for deficiencies of the ERM system.

4.1.4.4 Developments in 2011 and Outlook
Today, companies are operating in a more volatile risk
environment than ever before. Mature risk management
capabilities are therefore more critical, more strategic andoverall more valuable. EADS seeks to deploy its ERM systemeffectively across the Group in order to mitigate risk and drivecompetitive advantage, and invests accordingly. The design of
its ERM system has evolved towards a more homogeneous andperformance-oriented management tool that is integrated into
the business, with the following major achievements in 2011:
O strengthening of ERM foundations, with a progressive
appreciation of ERM processes and development of a truerisk culture;
O beginning roll-out of a dedicated Group-wide ERM IT tool;O strong ERM contribution to improvement initiatives launchedacross the Group; andO successful finalisation of year-end ERM compliance process,i.e. ERM confirmation letters were received from all relevantrisk owners in Divisions, Business Units and Business
Functions, and all ERM top management discussions took
place.

O further deploy and harmonise the Group-wide ERM IT tool;andO introduce a common skills model and career path for risk
managers.
More generally, EADS seeks to continuously evaluate andimprove the operating effectiveness of the ERM system.
EADS will use the recommendations from the Corporate Audit
department, which has reviewed risk management of selected
departments and business processes, to further strengthen its
ERM system.

4.1.4.5 Board declaration – Limitations
The Board of Directors believes to the best of its knowledge thatthe internal risk management and control system over ﬁnancial
reporting has worked properly in 2011 and provides reasonableassurance that the ﬁnancial reporting does not contain any
errors of material importance.
No matter how well designed, all ERM systems have inherent
limitations, such as vulnerability to circumvention or management
overrides of the controls in place. Consequently, no assurance
can be given that EADS’ ERM system and procedures are or willbe, despite all care and effort, entirely effective.

As an outlook, EADS seeks to:
O follow the path to further mature risk management, especially
ERM awareness, capabilities, culture and risk management
organisation;
O fully embed the risk management organisation into business
operations;
O improve ERM measurement, modelling and analytics for
decision-making;O further improve transparency, reduce risk criticality andencourage seizing of opportunity by use of the ERM
methodology;

4.1.4.6 Business Processes Coveredby the ERM System
Based on EADS’ activities, 20 high-level business processes
have been identiﬁed within EADS. They are categorised into
core processes (research and development, production,
sales, after-sales and programme management), support
processes (corporate sourcing, Human Resources, accounting,ﬁxed assets, treasury, information technology, mergers andacquisitions, legal and insurance) and management processes(strategy, corporate audit, controlling, compliance, Enterprise
Risk Management and management controls). These businessprocesses, together with the corresponding ERM processes,
are designed to control process risks that have signiﬁcant

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potential to affect the Group’s ﬁnancial condition and resultsof operations. Below is a description of the main businessprocesses at the respective headquarters’ level which were inplace during 2011.

liquidity, foreign exchange rates and interest rates. Controlledsubsidiaries fall within the scope of the centralised treasury
management procedures, with similar monitoring procedures
existing for jointly controlled afﬁliates, such as MBDA.

Accounting

Cash Management

At the core of EADS’ ERM system are accounting processes andcontrols designed to provide reasonable assurance regarding
the reliability of ﬁnancial reporting and the preparation of ﬁnancial
statements and other ﬁnancial information used by managementand disclosed to EADS’ investors and other stakeholders. The
integrated approach to planning and reporting aims to improve
internal communication and transparency across departments
and organisational units within EADS.

The management of liquidity to support operations is one of the
primary missions of the EADS Central Treasury department.
Regular cash planning, in conjunction with the planning/
reporting department, as well as monthly cash reporting by
the central treasury department, provide management with theinformation required to oversee the Group’s cash proﬁle andto initiate necessary corrective action in order to ensure overallliquidity. To maintain targeted liquidity levels and to safeguardcash, EADS has implemented a cash pooling system withdaily cash sweeps from the controlled subsidiaries to centrally
managed accounts. Payment fraud prevention procedures
have been deﬁned and communicated throughout the Group.
For management of credit risks related to ﬁnancial instruments,
see “Notes to the Consolidated Financial Statements (IFRS) —Note 34A: Financial risk management”.

The EADS ﬁnancial control model deﬁnes the planning andreporting procedures that apply to all operational units of theGroup, as well as the responsibilities of the Chief Financial
Ofﬁcer, who is charged with developing, implementing andmonitoring these procedures. Among the Chief Financial
Ofﬁcer’s primary tasks is oversight of the preparation of
the Consolidated Financial Statements of EADS, which areprepared under the direct supervision of the Chief Accounting
Ofﬁcer (“CAO”). The CAO is responsible for the operation of theGroup’s consolidation systems and rules and for the deﬁnitionof Group-wide accounting policies which comply with IFRS,
reporting rules and ﬁnancial guidelines in order to ensure theconsistency and quality of ﬁnancial information reported by theDivisions and Business Units. EADS’ accounting policies are
set out in a written accounting manual, which is agreed with theCompany’s external auditors. Changes to the EADS accounting
manual require approval by the CAO, and, where signiﬁcantchanges are involved, the Chief Financial Ofﬁcer or the Board of
Directors (based upon the advice of the Audit Committee).
Control of the ﬁnancial planning and reporting processes isachieved not only through the development of Group-wideaccounting systems and policies, but also through an organised
process for providing information from the reporting units on atimely basis as an up-to-date decision-making tool to control
the operational performance of the Group. This information
includes regular cash and treasury reports, as well as otherﬁnancial information used for future strategic and operativeplanning and control and supervision of economic risks arisingfrom the Group’s operations. The Divisional Chief Financial
Ofﬁcers frequently meet with the CAO and his responsible staff
to discuss the ﬁnancial information generated by the Divisions.
Prior to being disclosed to the public and subsequently
submitted for approval to the shareholders, the consolidated
year-end ﬁnancial statements are audited by EADS’ external
auditors, reviewed by the Audit Committee and submitted forapproval by the Board of Directors. A similar procedure is used
for the semi-annual and quarterly closing. Group auditors are
involved before EADS ﬁnancial statements are submitted to theBoard of Directors.

Treasury
Treasury management procedures, deﬁned by EADS’ central
treasury department at Group headquarters, enhance
management’s ability to identify and assess risks relating to

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Hedge Management
Commercial operations generate material foreign exchange andinterest rate exposures. A Group hedging policy is deﬁned andupdated regularly by the Board of Directors. In order to ensurethat all hedging activity is undertaken in line with the Group
hedging policy, the central treasury department executes all
hedging transactions. The central treasury department conducts
ongoing risk analysis and proposes appropriate measures to theDivisions and Business Units with respect to foreign exchange
and interest rate risk. Subsidiaries are required to calculate,
update and monitor their foreign exchange and interest rate
exposure with the EADS Central Treasury department on amonthly basis, in accordance with deﬁned treasury procedures.
See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — 2.1.7 Hedging Activities”.

Sales Financing
In connection with certain commercial contracts, EADS may
agree to enter into sales ﬁnancing arrangements. In respect ofsales ﬁnancing at Airbus, an annual sales ﬁnancing budget isdeﬁned as part of the EADS operative planning process. Sales
ﬁnancing transactions are approved on a case-by-case basiswith the involvement of top management, in line with certain
risk assessment guidelines and managed by a Group-wide
integrated organisation.

Sales
Commercial contracts entered into by EADS’ operating
subsidiaries have the potential to expose the Group to signiﬁcant
ﬁnancial, operational and legal risks. To control these risks,management has implemented contract proposal review
procedures that seek to ensure that EADS does not enter intomaterial commercial contracts that expose it to unacceptablerisk or are not in line with the Group’s overall objectives. These
procedures include (i) Board of Directors-approved thresholds
and criteria for determining the risk and proﬁtability proﬁlesand (ii) a mandated pre-approval process for contracts deﬁned

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as “high-risk”. Contracts falling within the deﬁned thresholdcategories require approval by the respective Divisional Chief
Financial Ofﬁcer. Contracts that are deemed “high-risk” and/exceed certain thresholds must be submitted to a standing
Commercial Committee (with the Chief Financial Ofﬁcer and theChief Strategy and Marketing Ofﬁcer serving as Chairmen, and apossible escalation to the Chief Executive Ofﬁcer when needed).
This committee is responsible for reviewing the proposal andgiving recommendations when necessary, based on which theconcerned Business Unit is allowed to remit its offer. In the caseof Airbus, due to the nature and size of its business, contracts
are approved in accordance with Airbus’ own corporate
governance policy based on EADS guidelines which follow thesame principle, with participation of EADS. In general, where
EADS shares control of a subsidiary with a third party, theCommercial Committee is responsible for developing the EADS
position on proposed commercial contracts.

Legal
EADS is subject to myriad legal requirements in each jurisdictionin which it conducts business. The mission of the EADS Legal
department, in coordination with the Division and Business Unit
Legal departments, is to actively promote and defend the interestsof the Group on all legal issues and to ensure its legal security
at all times. By carrying out this mission it is responsible for
implementing and overseeing the procedures designed to ensurethat EADS’ activities comply with all applicable laws, regulations
and requirements. It is also responsible for overseeing all major
litigation affecting the Group, including Intellectual property.
The EADS Legal department, together with the Corporate
Secretary, also plays an essential role in the design andadministration of (i) the EADS corporate governance proceduresand (ii) the legal documentation underlying the delegationof powers and responsibilities which deﬁne the EADS
management and its internal control environment.

Corporate Audit
The EADS Corporate Audit department, under the direction of
the Corporate Secretary, provides assurance to the Executive
Committee and Audit Committee Members based upon arisk-oriented approved annual audit plan. The Corporate Audit
department (i) reviews the achievement of the Group’s strategic,
ﬁnancial or operational objectives, (ii) reviews the reliability and

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integrity of Group reporting, (iii) reviews the effectiveness of
the ERM system, (iv) reviews the efﬁciency and effectivenessof selected processes, entities or functions and (v) reviews
compliance with laws, regulations, Group guidelines andprocedures. Corporate audit also conducts ad hoc reviews,
performed at the request of management, focusing on current(e.g., suspected fraudulent activities) and future (e.g., contract
management and programme management) risks. In 2011,
the Institut français de l’audit et du contrôle internes (IFACI)
reviewed the Corporate Audit department and certiﬁed that
it fulﬁlled the requirements of the International Professional
Practices Framework. Corporate audit also established aforensic function in 2011, with specialist expertise to support theGroup in its treatment of compliance allegations.

Corporate Sourcing
The performance of EADS is to a large extent determinedthrough its supply chain. Therefore, sourcing is a key lever for
EADS in its marketplace.
EADS’ size and complexity requires a common approachto maximise market levers and to avoid inefﬁciencies in the
procurement process. To help ensure that sourcing is carriedout in the most effective, efﬁcient and ethical manner, a set ofcommon procurement processes, which support a common
sourcing strategy and ultimately the Group strategy and vision,is deﬁned by the head of Corporate Sourcing and the Chief
Procurement Ofﬁcers Council.
The common approach and processes are then implemented
and optimised across all Divisions through the sourcing
networks. These sourcing networks comprise representatives
from all Divisions. They are tasked by the EADS Chief
Procurement Ofﬁcers Council to deﬁne and roll out across
EADS strategic sourcing topics such as Supplier RelationshipManagement, Common Processes and Tools, Global
Sourcing, Joint Procurement, Compliance, Corporate Social
Responsibility, and Procurement Performance Management.
The procurement processes are regularly reviewed by means of
performance indicators, audits and self-assessments and thus
consistently challenged and optimised.

Ethics and Compliance
See “— 4.1.5 Compliance Organisation” below.

4.1.5 Compliance Organisation
The EADS Group Chief Compliance Ofﬁcer (“CCO”) is incharge of the design and implementation of the EADS Ethics
and Compliance Programme, which supports the Group’scommitment to adhering to the highest ethical and compliancestandards in order to sustain the Group’s global competitiveness.
The EADS Ethics and Compliance Programme seeks to ensurethat Group business practices conform to applicable laws andregulations as well as to ethical business principles endorsedby the Group. It also seeks to promote a culture of integrity andtransparency. A key programme element consists of the Group

Ethics Code, “Integrity & Transparency” (updated in 2010 andavailable on the Company’s website), which seeks to guide thedaily behaviour of all EADS employees.
A compliance organisation and resource network has been
implemented throughout the Group, in a structure that balances
proximity to day-to-day business activities with the necessary
independence. Accordingly, Compliance Ofﬁcers throughout
the Group report both to management as well as to thecompliance organisation. This is reﬂected at the very top of thehierarchy, with the EADS Group CCO reporting both to the Chief

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Executive Ofﬁcer and the Audit Committee, which oversees thefunctioning of the Group-wide compliance organisation as awhole.
Compliance Ofﬁcers appointed in each of EADS’ four
Divisions as well as various Business Units are in chargeof supporting employees to conduct business ethicallyand in accordance with the EADS Ethics and Compliance
Programme. Chief Compliance Ofﬁcers at the Divisions andBusiness Units must ensure that they have sufﬁ cient local
resources to carry out their roles effectively, and report bothto the EADS Group CCO and to the head of the relevant
Division or Business Unit.
At Group level, permanent Compliance Ofﬁcers are appointed
to departments where the main compliance risks exist, andare empowered to issue compliance directives applicablethroughout the Group. For example, the Group International
Compliance Ofﬁcer is in charge of developing and implementing
EADS’ Business Ethics Policy and Rules to prevent corruption.
The Group Export Compliance Ofﬁcer seeks to ensure that theactivities of the Group comply with all relevant export control
rules and with the internal “sensitive countries” policy, while theGroup Procurement Compliance Ofﬁcer supervises compliancein the supply chain. Since 2010, a fourth departmental
Compliance Ofﬁcer has been in charge of more effectively
addressing data privacy compliance risks in the Group.
In order to achieve the objectives set by the Chief Executive
Ofﬁcer and discussed with the Audit Committee, the EADSGroup CCO has established a compliance “roadmap” based oninternational standards. The roadmap provides an overview ofcompliance activities such as:

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O the monitoring of Ethics and Compliance policies;
O transparent reporting to the Audit Committee anddiscussions with the Executive Committee;
O communication and training activities across the Group; andO the functioning of the new alert system implemented in 2010,
the “OpenLine”, through which employees may raise ethicaland compliance concerns in strict confidentiality and without
fear of retaliation. Due to current regulatory requirements,
alerts posted on the OpenLine may only be treated if they
deal with accounting, financial, corruption, or anti-competitive
practices (since 2011) issues. The use of the OpenLine islimited to employees of all companies controlled by the Groupand located in France, Germany, Spain and the UK. Taking
into account EADS’ overall compliance strategy, EADS will
monitor the OpenLine system and will assess the possibility ofextending its use to all employees and broadening its scope
to issues of a general and operational nature.
In 2011, programme progress reports were presented four times
to the Board of Directors and the Audit Committee.
In the future, EADS will continue to lead efforts to establish
consistent global standards for compliance in the aerospaceand defence industry, in particular business ethics. Today, theEuropean Common Industry standards and the International
Forum on Business Ethical Conduct are both among themost innovative sector-wide business ethics initiatives.
As such industry standards become more consistent globallywith a more level playing ﬁeld for all, EADS will seek to turnits commitment to ethics and integrity into a sustainable
competitive advantage.

O a periodic assessment and reporting of the main compliancerisks as part of the EADS ERM system;

4.2 Interests of Directors and Principal
Executive Ofﬁcers
4.2.1 Remuneration Granted to Directors and Principal Executive Ofﬁcers
4.2.1.1 General Principles

O is fair and transparent;

Strategy

O is competitive against the comparable market;

EADS’ remuneration strategy is to provide remuneration that:

O can be applied consistently throughout the Group.

O attracts, retains and motivates qualified executives;

BenchmarkO is aligned with shareholders’ interest;

The remuneration policy is benchmarked regularly against thepractice of other global companies, using peer group data andgeneral industry data of consulting ﬁrms. The benchmark data

O is performance-related to a significant extent;

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1
is a weighted average of French, German and UK information, inthe home countries of EADS. In countries outside EADS’ homeregion (such as the US), EADS benchmarks against national
peer group data of the industry. The total target remunerationfor executives is targeted at the median level compared to thebenchmark data.

4.2.1.2 Detailed Remuneration Policy
Non-executive Members of the Boardof Directors
Each non-executive Member of the Board of Directors receives
an annual ﬁxed fee of € 80,000, as well as a fee for participationin Board meetings of € 5,000 per meeting attended.

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The Chairman of the Board receives an annual ﬁxed feeof € 180,000 for carrying out this role, as well as a fee forparticipation in Board meetings of € 10,000 per meeting attended.
The Chairmen of each of the Board Committees receive anadditional annual ﬁxed fee of € 30,000. The members of eachof the Board Committees receive an additional annual ﬁxed
fee of € 20,000 for each Committee Membership. Committee
chairmanship and Committee Membership annual fees are
cumulative if the concerned non-executive Members of theBoard of Directors belong to two different Committees.
Non-executive Members of the Board of Directors are
not entitled to variable remuneration or grants under
EADS’ Long-Term Incentive Plans.

Chief Executive Officer
The Chief Executive Ofﬁcer (the sole Executive Member of the Board of Directors) does not receive fees for participation in Board
meetings or any dedicated compensation as a Member of the Board of Directors. Rather, the remuneration policy for the Chief
Executive Ofﬁcer (as well as the other members of the Executive Committee) is designed to balance short-term operational
performance with the mid- and long-term objectives of the Company and consists of the following main elements:
Remuneration Element

Main drivers

Performance measures% of total target
remuneration/% of vesting• EADS CEO: 45%of total target remuneration
Base salary

Reward market value of job/position

Annual variable remuneration

Reward annual performance basedon achievement of Company
performance measures andindividual/team objectives, including
financial and non-financial targets
and behaviours

Long term incentive plan

Reward long-term Company
performance and engagement
on financial targets

Not applicable• Other Members of
the Executive Committee: 50%of total target remuneration

Collective part (50% of target
variable remuneration):
EBIT* (50%), Cash (50%)• EADS CEO: 55% of total

Individual part (50% of target
variable remuneration):achievement of annual
individual objectives• Other Members of
the Executive Committee: 50%of total target remuneration(range from 0% to 200%)

The number of performance units
which will vest is based on 3 year
absolute average earnings per
share at EADS level

Vested performance units
will range from 50% to 150%
of initial grant (1)target remuneration(range from 0% to 200%)(1) In case of absolute negative results during the performance period, the Board of Directors can decide to review the vesting of the performance units including the 50% portion
which is not subject to performance conditions (additional vesting condition).

In addition, the Chief Executive Ofﬁcer (as well as the other members of the Executive Committee) is entitled to pension and otherbeneﬁts as described below.

4.2.1.3 Remuneration of the Members of the Board of Directors
The amounts of the various components constituting the compensation granted to the Chief Executive Ofﬁcer and to Non-Executive
Directors during 2011, together with additional information such as the number of performance units (see “— 4.3.3 Long-Term
Incentive Plans”) and details of the pension beneﬁts entitlements of the Chief Executive Ofﬁcer, are set out in “Notes to the Company
Financial Statements — Note 11: Remuneration”.

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They are summarised below as well:

Total remuneration and related compensation costs
The total remuneration and related compensation costs of the Members of the Board of Directors related to 2011 and 2010 can besummarised as follows:
2011
Non-Executive Members of the Board of Directors

2010

in €

in €

Fixed fees (1)1,170,000

1,170,000

Fees for participation in meetings

425,000

520,000

2011

2010

in €

in €

Base salary

990,000

900,000

Annual variable remuneration (related to reporting period including part paid by EADS NV)

1,993,475

1,732,500(1) The fixed fees related to 2010 were paid in 2011; the fixed fees related to 2011 will be paid in 2012.

Executive Member of the Board of Directors

The cash remuneration of the non-executive Members of the Board of Directors related to 2011 was as follows:
Fixed fees (1) in €Fees for participation in meetings in €Total in €Bodo Uebber

210,000

90,000300,000

Rolf Bartke

100,000

45,000145,000

Dominique D’Hinnin

120,000

45,000165,000

2011

Director

Juan Manuel Eguiagaray Ucelay

80,00040,000120,000

Arnaud Lagardère

100,000

30,000130,000

Hermann-Josef Lamberti

130,000

35,000165,000

80,00030,000110,000

Sir John Parker

130,000

35,000165,000

Michel Pébereau

100,000

35,000135,000

Wilfried Porth

120,000

40,000160,000

1,170,000

425,000

1,595,000

Lakshmi N. Mittal

(2)

Total
(1) The fixed fees will be paid in 2012.
(2) Excluding the fees related to 2010 paid in 2011.

The cash remuneration of the Executive Member of the Board of Directors related to 2011 was as follows:
2011

Base salary in €Annual variable remuneration in € related to 2011

990,000

1,993,475

Director
Louis Gallois

Long-term incentives
The table below gives an overview of the performance units granted to the Chief Executive Ofﬁcer in 2011 pursuant to the LTIP:
Unit plan: number of performance units (1)Louis Gallois

Granted in 2011

Vesting dates

51,400

Vesting schedule is made up of 4 payments over 2 years:(i) 25% expected in May 2015;(ii) 25% expected in November 2015;(iii) 25% expected in May 2016;(iv) 25% expected in November 2016.

(1) Vesting of all performance units granted to the Chief Executive Officer is subject to performance conditions.

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Pension benefits

Non-competition clause

The twelve members of the Executive Committee have pension
promises as part of their employment agreements. The generalpolicy is to give them annual pensions of 50% of their annual
base salary upon reaching ﬁve years of service in the Executive
Committee of EADS, payable once they reach retirement age.

A non-competition clause is included in the terms of the Chief
Executive Ofﬁcer’s mandate, applicable for one-year startingat the end of the mandate contract, and renewable for anotheryear at the Company’s initiative. The clause envisages acompensation equal to 50% of the last target annual salary,deﬁned as the base salary plus the last paid annual variable
remuneration. The application of the clause is subject to a
Board of Directors’ decision.

These rights can gradually increase to 60% after a second term,
usually after ten years of service in the Executive Committee.
However, in order to reach this 60% replacement ratio therespective member of the Executive Committee must also have
12 years of seniority within the Group.
These pension schemes have been implemented throughcollective executive pension plans in France and Germany.
These pension promises also have separate rules, e.g. forminimum length of service and other conditions to comply withnational regulations.
For the Chief Executive Ofﬁcer, the amount of the pension
deﬁned beneﬁt obligation (i.e. the book cash value) amounted
to € 2.9 million as of 31 December 2011, while the amountof current service and interest cost related to his pension
promise accounted for the ﬁnancial year 2011 represented an
expense of € 0.6 million. This obligation has been accrued in theConsolidated Financial Statements.
Non-executive Members of the Board of Directors do notreceive pension beneﬁts.

Termination indemnity
As part of his mandate contract, the Chief Executive Ofﬁcer isentitled to a termination indemnity when the departure resultsfrom a decision by the Company in case of change in control orchange in the Company’s strategy. Payment of the terminationindemnity is also subject to performance conditions as ﬁxed
and assessed by the Board of Directors. The terminationindemnity, if applicable, would amount to a maximum of
18 months of annual total target remuneration.
However this termination indemnity rule is not applicable, since
the Chief Executive Ofﬁcer has reached the age of 65 and isable to retire immediately.
Non-executive Members of the Board of Directors do not have atermination indemnity.

The Chief Executive Ofﬁcer has pro-actively renounced the
beneﬁt of such compensation, while remaining tied by the
non-compete clause; the Board of Directors has agreed to thisrequest.

Other benefits
The Chief Executive Ofﬁcer is entitled to a company car.
The value of his company car as of 31 December 2011 is€ 24,120 (excluding VAT).

4.2.1.4 Remuneration of the Membersof the Executive Committee
The members of the Executive Committee, including the Chief
Executive Ofﬁcer, are entitled to receive for the year 2011
total remuneration on a full year basis of € 18,786,097 (forcompensation paid in the US, 2011 average exchange rate has
been used). This remuneration is divided for the Chief Executive
Ofﬁcer into a 45% ﬁxed part and a 55% variable part on target
and for the other members of the Executive Committee into a
50% ﬁxed part and a 50% variable part on target.
The total remuneration paid by EADS and all its Group
companies to Mr Louis Gallois, Chief Executive Ofﬁcer, during
the year 2011, was € 2,722,500 (this sum includes the paymentsof his January to December 2011 base salary (€ 990,000) andthe variable pay for 2010 (€ 1,732,500).
The members of the Executive Committee including the Chief
Executive Ofﬁcer receive the majority of their remuneration fromtheir relevant national Group entity (under the terms of theiremployment or mandate contract) and the remaining part fromEADS NV (“NV compensation”, under the terms of the NV letterof agreement).

4.2.2 Long-Term Incentives Granted to the Chief Executive Ofﬁcer
See “— 4.3.3 Long-Term Incentive Plans”.

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4.2.3 Related Party Transactions
Article 2:146 of the Dutch Civil Code provides as follows:“Unless the Articles of Association provide otherwise, acompany (naamloze vennootschap) shall be represented by
its Board of supervisory Directors in all matters in which it
has a conﬂict of interest with one or more of the members of
its Board of Directors. The shareholders’ meeting shall at all
times have powers to designate one or more persons for thispurpose”. In the case of EADS, the Articles of Association doprovide otherwise since they enable the Board of Directors tohave power to represent the Company in matters where theCompany has a conﬂict of interest with one or more Membersof the Board of Directors.
During the years 2009, 2010 and 2011, no agreement wasentered into by the Company with one of its Directors or
principal ofﬁcers or a shareholder holding more than 5% of thevoting rights of the Company outside the ordinary course ofbusiness and in conditions other than arm’s length conditions.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 36: Related party transactions” for the year ended
31 December 2011 and “Notes to the Consolidated Financial
Statements (IFRS) — Note 36: Related party transactions”
for the year ended 31 December 2010, as incorporated byreference herein.
For a description of the relationships between the Company
and its principal shareholders, see “General Description of theCompany and its Shareholders — 3.3.2 Relationships with
Principal Shareholders”. Other than the relationships between
the Company and its principal shareholders described therein,
there are no potential conﬂicts of interest between the duties
to the Company of the Directors and their respective privateinterests or other duties.

4.2.4 Loans and Guarantees Granted to Directors
EADS has not granted any loans to its Directors or members of the Executive Committee.

4.3 Employee Proﬁt Sharing and Incentive Plans
4.3.1 Employee Proﬁt Sharing and Incentive Agreements
EADS’ remuneration policy is strongly linked to the achievementof individual and Company objectives, both for each Divisionand for the overall Group. In 2011, a performance and restrictedunit plan was established for the senior management of
the Group (see “— 4.3.3 Long-Term Incentive Plans”), andemployees were offered shares at favourable conditions
within the context of a new employee share ownership plan(see “— 4.3.2 Employee Share Ownership Plans”).

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4.3.2 Employee Share Ownership Plans
EADS supports employee share ownership. Since its creation, EADS has regularly offered qualifying employees the opportunity topurchase EADS shares on favourable terms through employee share ownership plans (“ESOPs”).
The following table summarises the main terms of the ESOPs conducted from 2000-2011 (3):Year

Price per shareNominal value per share

Number of shares issued

Date of issuance2000€ 15.30€1

11,769,259

21 September 2000

2001

€ 10.70€12,017,894

5 December 2001

(2)

€1

2,022,939

4 December 2002

2003

€ 12.48€1

1,686,682

5 December 2003

2004

€ 18

€1

2,017,822

3 December 2004

€ 18.86€1

1,938,309

29 July 2005

(1)

2002

€ 8.86 /€ 7.93

2005
(1)

2007

€ 19.62 /€ 17.16

(2)

€1

2,037,835

9 May 20072008

€ 12.79 (1)/€ 11.70 (2)€12,031,820

25 July 2008

€ 10.76€1

1,358,936

18 December 2009

(2)

€1

2,445,527

29 July 2011

2009
2011

(1)

€ 22.15 /€ 21.49(1) Shares purchased within context of Group employee savings plan.
(2) Shares purchased directly.
(3) In 2010, the normal ESOP plan was replaced through a worldwide 10 years EADS – Special Anniversary Free Share Plan for about 118,000 employees in 29 countries. Each eligible
employee was granted 10 free shares in EADS, resulting in the distribution of 1,184,220 shares in total. Such shares were distributed out of treasury and therefore had no impact on
the issued share capital.

ESOP 2011
In June 2011, EADS offered to qualifying employees a maximumof 0.39% of its total issued share capital before the offering.
This employee offering was for up to 3,200,000 shares of anominal value of € 1 each.
The employee offering was open only to employees who:
O had at least three months’ seniority;
O were employed by (i) EADS or (ii) one of its subsidiaries or(iii) companies in which EADS holds at least 10% of the sharecapital and over whose management it has a determining
influence.
The employee offering was divided into two tranches:
O shares subscribed for by qualifying employees as part ofa Group employee savings plan were offered for a price of€ 22.15 per share;
O shares subscribed for by qualifying employees directly were
offered for a price of € 21.49 per share.
The 2011 ESOP was structured as a share matching plan,
whereby EADS matched a certain number of shares purchased
at fair market value with a grant of free shares based on adeﬁned ratio. This ratio varied depending on the number ofshares purchased, representing a maximum discount of 50%
for 10 purchased shares and a minimum discount of 21%
for 400 purchased shares (the maximum number of sharesavailable for purchase by a single employee).
The employees are generally restricted from selling the shares
offered in this employee offering for one year and sometimes
longer in certain countries. A total number of 2,445,527 shareswere issued in the employee offering. Shares were delivered on
29 July 2011.

Future ESOPs
EADS intends to implement an ESOP in 2012, subject toapproval by the Board of Directors. The 2012 ESOP is expected
to be a share matching plan, whereby the Company would
match a certain number of shares purchased at fair market
value with a grant of free shares based on a deﬁned ratio.
The total offering would be up to approximately
3,200,000 shares of the Company, i.e. up to 0.39% of its issued
share capital, open to all qualifying employees (including the
Chief Executive Ofﬁcer). As part of ESOP 2012, a dedicatedUK share incentive plan (SIP) was launched in December 2011subject to a ﬁnal decision by the Board of Directors.

4.3.3 Long-Term Incentive Plans
Based on the authorisation granted to it by the shareholders’meetings (see dates below), the Board of Directors approved
stock option plans in 2001, 2002, 2003, 2004, 2005 and 2006.
In 2007, 2008, 2009, 2010 and 2011, the Board of Directors

approved the granting of performance units and restricted units
in the Company. The grant of so-called “units” will not physicallybe settled in shares but represents a cash settled plan inaccordance with IFRS 2.

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The principal characteristics of these options as well as performance and restricted units as of 31 December 2011 are set out in the“Notes to the Consolidated Financial Statements (IFRS) — Note 35: Share-based payment”. They are also summarised in the tables
below:
Third tranche

Fourth tranche

Date of shareholders’ meeting

10 May 2001

10 May 2001

Date of Board of Directors meeting (grant date)

12 July 2001

9 August 2002

8,524,250

7,276,700-

1,593,543

135,000

135,000

135,000

135,000

738,000

808,000

1,650

1,562

Number of options granted
Number of options outstanding
Options granted to:• Mr Philippe Camus• Mr Rainer Hertrich• the 10 employees having being granted the highest
number of options during the year 2001
(third tranche) and 2002 (fourth tranche)

Total number of eligible employees

Exercise date

Expiry dateConversion right
VestedExercise price
Exercise price conditions
Number of exercised options

Date of shareholders’ meeting
Date of Board of Directors meeting (grant date)

50% of options may be exercised after a period of two years and four weeks
from the date of grant of the options; 50% of options may be exercised as of
the third anniversary of the date of grant of the options (subject to specificprovisions contained in the Insider Trading Rules – see “General Description of
the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
12 July 2011

8 August 2012

One option for one share

One option for one share

100%

100%

€ 24.66€ 16.96

110% of fair market value of the shares at the date of grant
3,492,831

5,058,674

Fifth tranche

Sixth tranche

6 May 2003

6 May 2003

10 October 2003

8 October 2004

Number of options granted

7,563,980

7,777,280

Number of options outstanding

3,165,988

5,269,000

135,000

135,000

135,000

135,000

808,000

808,000

1,491

1,495

Options granted to:• Mr Philippe Camus• Mr Rainer Hertrich• the 10 employees having being granted the highest

number of options during the year 2003 (fifth tranche)and 2004 (sixth tranche)

Total number of eligible employees

Exercise date

Expiry dateConversion right
VestedExercise price
Exercise price conditions
Number of exercised options

50% of options may be exercised after a period of two years and four weeks
from the date of grant of the options; 50% of options may be exercised as of
the third anniversary of the date of grant of the options (subject to specificprovisions contained in the Insider Trading Rules – see “General Description of
the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
9 October 20137 October 2014

One option for one share

One option for one share

100%

100% (1)€ 15.65€ 24.32

110% of fair market value of the shares at the date of grant
3,771,068

5,900(1) As regards to the sixth tranche, vesting of part of the options granted to the top EADS executives was subject to performance conditions. As a result, part of these conditional
options have not vested and were therefore forfeited during the year 2007.

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Seventh tranche

Date of shareholders’ meeting
Date of Board of Directors meeting (grant date)

11 May 2005
9 December 2005

Number of options granted

7,981,760

Number of options outstanding

5,800,678

Options granted to:• Mr Thomas Enders• Mr Noël Forgeard• the 10 employees having being granted the highest

number of options during the year 2005 (seventh tranche)

Total number of eligible beneficiaries

Exercise date

Expiry dateConversion right

135,000
135,000
940,000
1,608
50% of options may be exercised after a period of two years from the dateof grant of the options; 50% of options may be exercised as of the third
anniversary of the date of grant of the options (subject to specific provisions
contained in the Insider Trading Rules — see “General Descriptionof the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
As regards to the seventh tranche, part of the options granted tothe top EADS executives was performance related.
8 December 2015
One option for one share

Vested100% (1)

Exercise price€ 33.91

Exercise price conditions

110% of fair market value of the shares at the date of grant

Number of exercised options-(1) As regards to the seventh tranche, vesting of part of the options granted to the top EADS executives was subject to performance conditions. As a result, part of these conditional
options have not vested and were therefore forfeited during the year 2008.

Eighth tranche

Date of shareholders’ meeting
Date of Board of Directors meeting (grant date)

4 May 2006
18 December 2006
Stock option plan

Number of options granted

1,747,500

Number of options outstanding

1,639,500

Options granted to:• Mr Thomas Enders• Mr Louis Gallois• the 10 employees having being granted the highest

number of options during the year 2006 (eighth tranche)

Total number of eligible beneficiaries

Date from which the options may be exercised

67,50067,500425,000
221
50% of options may be exercised after a period of two years from the dateof grant of the options; 50% of options may be exercised as of the third
anniversary of the date of grant of the options (subject to specific provisions
contained in the Insider Trading Rules — see “General Descriptionof the Company and its Share Capital — 3.1.11 Disclosure of Holdings”)

Date of expiration

16 December 2016

Conversion right

One option for one share

Vested100%

Exercise price€ 25.65

Exercise price conditions
Number of exercised options

110% of fair market value of the shares at the date of grant-

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Ninth tranche

Date of Board of Directors meeting (grant date)

7 December 2007
Performance and restricted unit plan

Number of units granted
Number of units outstanding

Performance units

Restricted units

1,693,940

506,060-

234,508

33,700-239,900

43,500

Units granted to:• Mr Louis Gallois• the 10 employees having being granted the highest

number of units during the year 2007 (ninth tranche)

Total number of eligible beneficiaries

1,617
The restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates.
Vesting schedule is made up of 4 payments over 2 years:• 25% expected in May 2011;• 25% expected in November 2011;• 25% expected in May 2012;• 25% expected in November 2012.

Vesting dates

Number of vested units

4,240

241,352

Tenth tranche

Date of Board of Directors meeting (grant date)

13 November 2008
Performance and restricted unit plan

Number of units granted(1)

Number of units outstanding

Performance units

Restricted units

2,192,740

801,860

2,104,820

761,420

40,000-304,000

68,200

Units granted to:• Mr Louis Gallois• the 10 employees having being granted the highest

number of units during the year 2008 (tenth tranche)

Total number of eligible beneficiaries

Vesting dates

Number of vested units

1,684
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of
performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:• 25% expected in May 2012;• 25% expected in November 2012;• 25% expected in May 2013;• 25% expected in November 2013.
5,600

3,780

(1) Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board of Directors candecide to review the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).

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Eleventh tranche

Date of Board of Directors meeting (grant date)

13 November 2009
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted (1)2,697,740

928,660

Number of units outstanding

2,612,380

910,360

46,000-356,000

96,000

Units granted to:• Mr Louis Gallois*• the 10 employees having being granted the highest
number of units during the year 2009 (eleventh
tranche)Total number of eligible beneficiaries

1,749
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of
performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:• 25% expected in May 2013;• 25% expected in November 2013;• 25% expected in May 2014;• 25% expected in November 2014.

Vesting dates

Number of vested units

7,850

3,400

(1) Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board of Directors candecide to review the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).
* For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

Twelfth tranche

Date of Board of Directors meeting (grant date)

10 November 2010
Performance and restricted unit plan
Performance units

Number of units granted(1)

Number of units outstanding

Restricted units

2,891,540

977,780

2,843,440

956,400

54,400-341,600

79,000

Units granted to:• Mr Louis Gallois*• the 10 employees having being granted the highest

number of units during the year 2010 (twelfth tranche)

Total number of eligible beneficiaries

Vesting dates

Number of vested units

1,711
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of
performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:• 25% expected in May 2014;• 25% expected in November 2014;• 25% expected in May 2015;• 25% expected in November 2015.
--(1) Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board of Directors candecide to review the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).
* For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

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Thirteenth tranche

Date of Board of Directors meeting (grant date)

9 November 2011
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted (1)2,588,950

877,750

Number of units outstanding

2,588,950

877,750

51,400-320,050-

Units granted to:• Mr Louis Gallois*• the 10 employees having being granted the highest
number of units during the year 2011 (thirteenth
tranche)Total number of eligible beneficiaries

Vesting dates

1,771
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of
performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:• 25% expected in May 2015;• 25% expected in November 2015;• 25% expected in May 2016;• 25% expected in November 2016.

Number of vested units--(1) Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board of Directors candecide to review the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).
* For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

The information in respect of stock options and performanceand restricted shares cancelled and exercised during the year
are set out in “Notes to the Consolidated Financial Statements(IFRS) — Note 35: Share-based payment”.

For information on the transactions carried out by the Membersof the Board of Directors and the Executive Committee see
EADS’ website and/or the relevant stock exchange authorities’
website.

Shareholding in the Company of the Members of the Board of Directors
Member of the Board of Directors• Mr Louis Gallois• Mr Dominique d’Hinnin• Mr Arnaud Lagardère(1) See eighth tranche as set forth in the above table.

The other Members of the Board of Directors do not hold shares or other securities in the Company.

150 I EADS REGISTRATION DOCUMENT 2011

Shareholding

15 ordinary shares
67,500 stock options (1)13,500 performance shares
61 ordinary shares
2 ordinary shares

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Entity Responsible
for the Registration Document
5.1 Entity Responsible for the Registration Document154

5.2 Statement of the Entity Responsible for the Registration
Document

154

5.3 Information Policy

155

5.4 Undertakings of the Company regarding Information

155

5.5 Signiﬁcant Changes

155

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5.1 Entity Responsible
for the Registration Document
EADS

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

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ENTITY RESPONSIBLE FOR THE REGISTRATION DOCUMENT
INFORMATION POLICY

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5.3 Information Policy
Contact details for information:
Mr Philippe Balducchi
Head of Investor Relations and Financial Communication
EADS
37, boulevard de Montmorency
75781 Paris Cedex 16 France
Telephone: +33 1 42 24 28 00
Fax: +33 1 42 24 28 40
E-mail: ir@eads.com

A website, www.eads.com, provides a wide range of informationon the Company, including the Board of Directors Report.
Additionally, for the life of this Registration Document, copies of:
O the Articles of Association;
O the Registration Document filed in English with, and approved
by, the AFM on 21 April 2010;
O the Registration Document filed in English with, and approved
by, the AFM on 19 April 2011, andO the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the years
ended 31 December 2009, 2010 and 2011, together withthe related Auditors’ reports, may be inspected at EADS’registered office at: European Aeronautic Defence and Space
Company EADS N.V., Mendelweg 30, 2333 CS Leiden,
the Netherlands, Seat (statutaire zetel) Amsterdam, Tel:.
+31 (0)71 5245 600.
Special toll-free hotlines are available to shareholders inFrance (0 800 01 2001), Germany (00 800 00 02 2002) andSpain (00 800 00 02 2002). An e-mail box is dedicated toshareholders’ messages: ir@eads.com.

5.4 Undertakings of the Company regarding
Information
Given the fact that the shares of the Company are listed onEuronext Paris, on the regulierter Markt (in the sub-segment
Prime Standard) of the Frankfurt Stock Exchange and on the
Madrid, Bilbao, Barcelona and Valencia Stock Exchanges, theCompany is subject to certain laws and regulations applicablein France, Germany and Spain in relation to information, themain ones of which are summarised in “General Description of
the Company and its Share Capital — 3.1.3 Governing Laws
and Disclosures”.

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5.5 Signiﬁcant Changes
As of the date of this Registration Document, there has been no signiﬁcant change in the Group’s ﬁnancial or trading position since
31 December 2011.

EADS REGISTRATION DOCUMENT 2011 I 155

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210 mm

10

211 mm

20

211 mmwww.reports.eads.com

The complete EADS Annual Report suite 2011 consists of:www.eads.com

Here you will find the Financial Statements 2011

Annual Review 2011
Progressing, Innovating,Transforming

Registration Document 2011
Financial Statements

Photographs © by EADS: Airbus/Fixion - Astrium - Eurocopter/Deulin - Eurofighter/G.Lee
All rights reserved

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211 mmEuropean Aeronautic Defence
and Space Company EADS N.V.
Mendelweg 302333 CS Leiden
The Netherlands
In France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain

EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.

www.eads.com

20

211 mmREGISTRATIONDOCUMENT 201110

210 mmFINANCIALSTATEMENTS 2011

FINANCIAL STATEMENTS

Registration Document – Financial Statements

Registration
Document
2010
Financial Statements

9

2011

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