AIRBUS - 2019 Financial Statements

2.5 Operational Assets and Liabilities Notes to the IFRS Consolidated Financial Statements /

The Company endeavours to limit its sales financing exposure by sharing its risk with third parties usually involving the creation of a structured entity. Apart from investor interest protection, interposing a structured entity offers advantages such as flexibility, bankruptcy remoteness, liability containment and facilitating sell-downs of the aircraft financed. An aircraft financing structured entity is typically funded on a non-recourse basis by a senior lender and one or more providers of subordinated financing. When the Company acts as a lender to such structured entities, it may take the role of the senior lender or the provider

of subordinated loan. The Company consolidates an aircraft financing structured entity if it is exposed to the structured entity’s variable returns and has the ability to direct the relevant remarketing activities. Otherwise, it recognises only its loan to the structured entity under other long-term financial assets. At 31 December 2019 the carrying amount of its loans from aircraft financing amounts to € 349 million (2018: € 502 million). This amount also represents the Company’s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.

On-Balance Sheet Operating and Finance Leases The future minimum operating lease payments (undiscounted) due from customers to be included in revenue, and the future minimum lease payments (undiscounted) from investments in finance leases to be received in settlement of the outstanding receivable at 31 December 2019 are as follows:

Aircraft under operating lease

Finance lease receivables

(In € million)

Not later than 1 year

14

7

Later than 1 year and not later than 5 years

30

2

Later than 5 years

0

0

31 December 2019

44

9

Financing Liabilities Financing liabilities from sales financing transactions are mainly based on variable interest rates (see “– Note 36.3: Financing Liabilities”) and entered into on a non-recourse basis ( i.e. in a default event, the creditor would only have recourse to the aircraft collateral).

31 December

2019

2018

(In € million)

Loans

24

22

0

0

Liabilities to financial institutions

Total sales financing liabilities

24

22

Customer Financing Cash Flows Direct customer financing cash flows amount to €58 million in 2019 (2018: €79 million).

46

Airbus / Financial Statements 2019