AIRBUS - 2019 Registration Document

REGISTRATION DOCUMENT 2018

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

2.1.1 Overview

worldwide. In 2018, it generated 84%of its total revenues in the civil sector (compared to 83% in 2017 (restated)) (first three months 2019: 86%) and 16% in the defence sector (compared to 17% in 2017 (restated)) (first three months 2019: 14%). As of 31 December 2018, the Company’s active headcount was 133,671 employees (31 March 2019: 135,468 employees), mainly reflecting perimeter change from acquisitions.

With consolidated revenues of €63.7 billion in 2018 (€12.5 billion in the first three months 2019), the Company is a global leader in aeronautics, space and related services. The Company offers the most comprehensive range of passenger airliners. The Company is also a European leader providing tanker, combat, transport and mission aircraft, as well as one of the world’s leading space companies. In helicopters, the Company provides the most efficient civil and military rotorcraft solutions

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2.1.1.1 Exchange Rate Information The financial information presented in this document is expressed in euro, US dollar or pound 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:

Average

Year-end

Year ended

€/US$

€/£

€/US$

€/£

31 December 2016

1.1069

0.8195

1.0541

0.8562

31 December 2017

1.1297

0.8767

1.1993

0.8872

31 December 2018

1.1810

0.8847 0.8725

1.1450 1.1235

0.8945 0.8583

31 March 2019

1.1358

2.1.1.2 Reportable Business Segments The Company operates in three reportable segments which reflect the internal organisational and management structure according to the nature of the products and services provided. - - Airbus (formerly Airbus Commercial Aircraft and Headquarters) — Development, manufacturing, marketing and sale of commercial jet aircraft of more than 100 seats; aircraft conversion and related services; development, manufacturing, marketing and sale of regional turboprop aircraft and aircraft components. It also includes the holding function of the Company and its bank activities. - - Airbus Helicopters — Development, manufacturing, marketing and sale of civil and military helicopters; provision of helicopter related services. - - Airbus Defence and Space — Military Aircraft design, development, delivery, and support of military aircraft such as combat, mission, transport and tanker aircraft and their associated services. Space Systems design, development, delivery, and support of full range of civil and defence space systems for telecommunications, earth observations, navigation, science and orbital systems. Communication, Intelligence and Security provision of services around data processing from platforms, secure communication and cyber security. In addition, the main joint ventures design, develop, deliver, and support missile systems as well as space launcher systems. Unmanned Aerial Systems design, development, delivery and service support. - - “Transversal/Eliminations” comprises other activities not allocable to the reportable segments, combined together with consolidation effects.

2.1.1.3 Significant Programme Developments, Restructuring and Related Financial Consequences in 2016, 2017 and 2018 The following paragraphs present significant programme information for the past three years. Prior year figures ( i.e. 2016 and 2017) have not been restated due to the application of IFRS 15. 2018 description includes previous year figures restated due to the application of IFRS 15. In addition, relevant information related to the first quarter 2019 has been included. A380 programme. In 2016, Airbus found an agreement with Emirates and Rolls Royce to shift six deliveries from 2017 into 2018 and from 2018 into 2019, which secured the delivery profile into 2019. 12 aircraft remained the 2018 target for deliveries. Fixed cost reduction measures were accelerated to minimise the impact on breakeven at a lower level of deliveries. A total of 28 A380s were delivered during 2016. In 2017, Airbus delivered 15 A380 aircraft and planned to deliver 12 aircraft in 2018 and 8 aircraft in 2019. The Emirates order in February 2018 provided increased visibility on the A380 programme for the years to come. Based on that order, at a baseline of 6 deliveries per year, Airbus could produce the A380 in an industrial efficient way over the coming years. A reasonable industrial efficiency could be maintained at a baseline of 6 aircraft a year with an acceptable margin and cash dilution. As of 28 February 2018, Airbus had 331 orders for A380s, of which 222 had been delivered to 13 airlines. At that time, the A380 order book included orders for 8 customers. As of 31 December 2018, the Company’s largest A380 operator has reviewed its aircraft fleet strategy going forward and has concluded it is forced to restructure and reduce its A380 order by 39 aircraft. The Company entered into discussions with the customer in late 2018 which finally resulted in the signature of a head of agreement on 11 February 2019. Without this customer’s A380 order, the Company has no substantial order backlog and no basis to sustain A380 production, despite all

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Airbus / Registration Document 2018