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

2.1.6.3 Financing Liabilities The outstanding balance of the Company’s consolidated financing liabilities decreased from € 11.2 billion as of 31 December 2017 to € 8.9 billion as of 31 December 2018. The decrease is mainly due to early settlement of liabilities to financial institutions with the European Investment Bank (“EIB”) and the Development Bank of Japan (“DBJ”), and to the settlement of a Euro Medium Term Note (“EMTN”) bond in September 2018. As of 31 March 2019, it increased to € 11.0 billion, mainly related to the application of IFRS 16 and the issuance of commercial papers. For further information, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 34.3: Net Cash — Financing Liabilities”. 2.1.6.4 Sales Financing The Company favours cash sales and encourages independent financing by customers, in order to avoid retaining credit or asset risk in relation to delivered products. However, in order

to support product sales, primarily at Airbus and Airbus Helicopters, the Company may agree to participate in the financing of customers, on a case-by-case basis, directly or through guarantees provided to third parties. The financial markets remain unpredictable, which may cause the Company to increase its future outlays in connection with customer financing of commercial aircraft and helicopters, mostly through finance leases and secured loans and if deemed necessary through operating lease structures. Nevertheless, the Company intends to keep the amount as low as possible. Dedicated and experienced teams structure such financing transactions and closely monitor total finance and asset value exposure of the Company and its evolution in terms of quality, volume and intensity of cash requirements. The Company 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.

2

EVOLUTION OF AIRBUS GROSS EXPOSURE DURING 2018 IN US$ MILLION

1,516

31 December 2017

123

Additions

-565

Disposals

-155

Amortisation

31 December 2018

919

number of deliveries over the same period, i.e. 4 aircraft financed per year out of 735 deliveries per year on average. Airbus Helicopters’ gross customer financing exposure amounted to € 109 million as of 31 December 2018. This exposure is distributed over 62 helicopters, operated by approximately 6 companies. For further information, please refer to the “Notes to the IFRS Consolidated Financial Statements —Note 25: Sales Financing Transactions”.

Airbus gross customer financing exposure as of 31 December 2018 is distributed over 38 aircraft, operated at any time by approximately 11 airlines. In addition, the level of exposure may include other aircraft-related assets, such as spare parts. More than 90% of Airbus gross customer financing exposure is distributed over 7 countries (this excludes backstop commitments). Over the last three years (2016 to 2018), the average number of aircraft delivered in respect of which financing support has been provided by Airbus amounted to less than 1% of the average

2.1.7 Hedging Activities

its net current and future exchange rate exposure from the time of a customer order to the time of delivery, its profits will be affected by market changes in the 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.

More than 75% of the Company’s revenues are denominated in US dollars, with approximately 60% of such currency exposure “naturally hedged” by US dollar-denominated costs. The remainder of costs is incurred primarily in euros, and to a lesser extent, in pounds sterling. Consequently, to the extent that the Company does not use financial instruments to hedge

91

Airbus / Registration Document 2018