AIRBUS - 2019 Financial Statements

Notes to the IFRS Company Financial Statements /

Reconciliation of liabilities arising from financing liabilities:

Non-cash movements

Balance at 31 December 2019

Balance at 1 January

Fair value through profit or loss

Foreign exchange movements Others

2019 Cash flows

(In € million)

Bonds and commercial papers

2,791

0

88

25

(469)

2,435

Liabilities to financial institutions

87

0

0

2

0

89

Loans from Airbus Finance B.V.

3,868

0

168

17

3

4,056

Total

6,746

0

256

44

(466)

6,580

Non-cash movements

Balance at 1 January

Fair value through profit or loss

Foreign exchange movements Others

Balance at 31 December 2018

2018 Cash flows

(In € million)

Bonds and commercial papers

2,750

0

(32)

59

14

2,791

Liabilities to financial institutions

1,715

(1,680)

7

46

0

87

Loans from Airbus Finance B.V.

4,300

(500)

24

40

3

3,868

Total

8,765

(2,180)

(1)

(144)

18

6,746

14. Information about Financial Instruments

14.1 Financial Risk Management The Company acts as an intermediary for its subsidiaries when they wish to enter into derivative contracts to hedge against foreign exchange risk or other market risks such as interest rate risk, commodity price risk or equity price risk. The Company’s practice is to set up a derivative contract with a subsidiary and at the same time enter into a back-to-back derivative transaction with a bank. Contracts with subsidiaries being thus mirrored (on a one-to-one basis) by contracts with banks, the Company’s net exposure is virtually zero. There are, however, a few derivative contracts the Company holds in order to hedge its own market risk exposure. As the Company’s back-to-back hedge contracts are entered into with different counterparties, their fair values are reflected separately in the statement of Financial Position and recognised as other financial assets and financial liabilities as disclosed in Note 8 “Financial assets and liabilities” of the Company Financial Statements. In the Statement of Income the results of the back-to-back hedge transactions, both realised and unrealised, are presented on a net basis as the Company acts as an agent for its subsidiaries. The Company’s overall financial risk management activities and their objectives are described in detail in section 35.1 “Financial Risk Management” of the Notes to the Consolidated Financial Statements.

Market Risk Foreign exchange risk — The Company manages a long-term hedge portfolio with maturities of several years for its subsidiaries, mainly Airbus, and to a small extent for its joint ventures or associates. This hedge portfolio covers a large portion of Airbus’ firm commitments and highly probable forecast transactions. As explained above, owing to the Company’s back- to-back approach, its own exposure to foreign exchange risk is very limited. Interest rate risk — The Company uses an asset-liability management approach with the objective to limit its interest rate risk. The Company undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities, the remaining net interest rate exposure being managed through several types of interest rate derivatives. If the derivative instruments qualify for hedge accounting in the Company Financial Statements the Company applies cash flow hedge accounting or fair value hedge accounting. For more information on the risk management and hedging strategies used by the Group please refer to section 35.1 “Financial Risk Management” of the Notes to the Consolidated Financial Statements. Equity price risk — The Company is to a small extent invested in quoted equity securities mainly for operational reasons. The Company’s exposure to equity price risk is hence limited. Furthermore, Airbus is exposed under its long-term incentive plan (LTIP) to the risk of Airbus’ share price movements. In order to limit these risks for the Company, the Company enters into equity derivatives that reference the Airbus SE share price.

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Airbus / Financial Statements 2019