AIRBUS - 2020 Financial Statement

2. Notes to the IFRS Consolidated Financial Statements / 2.1 Basis of Preparation

through a terminal value. The latest operative planning includes management’s best assessment of future production rates, aircraft deliveries and order in-take, together with any mitigating actions that the Company may implement. These have been used to derive cash flow projections for the years 2021 until 2025, and thereafter for the terminal value. In addition, the Company performed a comparison with the fair value of each CGU derived from the market capitalisation. The market capitalisation as of 31 December 2020 amounts to €70.4 billion and significantly exceeds the equity of the Company.

adaptation and government support measures. Total payments to employees affected by the plan would amount to approximately €1.5 billion, including the settlement of other accrued employee benefits. As of 31 December 2020, the provision amounts to €1.0 billion, reduced mainly by the costs incurred in the fourth quarter. Operational assets The Company has performed a comprehensive review of its operational assets and liabilities taking into account the amended production rates and expected future deliveries. This review has resulted in charges being recorded in 2020 for an amount of €1.3 billion, including an impairment of inventories considered at risk of € 355 million, additional provisions relating to A380 programme of € 279 million, a write-off of capitalised development costs of €101 million, provisions for supplier commitments of €157 million and provisions covering various commercial risks of approximately €401 million. Deferred tax As of 31 December 2020, the recoverability of deferred tax assets has been assessed based on the latest operating planning and resulting from the COVID-19 pandemic. This has led to deferred tax asset impairments amounting to €356 million in 2020 including tax losses carried forward (see “– Note 18: Income Taxes”). Hedge accounting The Company has maintained its hedge accounting policies as defined in the 2019 year-end Financial Statements. In the Company’s assessment the risk of future cancellations that are not yet materialised has been included. When transactions are no longer expected to occur in accordance with the hedge designation, the accumulated gains or losses on the hedging instrument have been reclassified to financial result. The impact in financial result amounts to € -48 million as of 31 December 2020, mainly relating to the widebody programmes. The increase of the counterparty credit risk and credit spread is included in the determination of the fair value of the hedges and had limited impact on the measurement of hedge ineffectiveness. The Company performed a material roll-over campaign for a nominal amount of US$31 billion in the third quarter to re-align the hedging portfolio to the last available long term delivery plan, including roll-overs at historical rates for a nominal amount of US$ 8 billion in July 2020 as part of the liquidity measures. In this way, the Company mitigates the cash flow impacts occurring when the gains or losses on the forward hedges do not coincide with the currency gains or losses on the underlying commercial transactions (see “– Note 38: Financial Instruments”). In the Company’s assessment the risk of aircraft rescheduling beyond the risk management and the risk of future cancellations, notably due to potential airlines default, have been included. The Company will continue to review this position going forward to identify any potential trigger for hedge disqualification. 2.5 2.6 2.7

2.3

Other Investments and Other Long-Term Financial Assets / Joint Ventures

The Company’s main investments have been impacted by the high volatility in financial markets in 2020 with the variation recorded either through financial result or OCI. The impact in financial result amounts to € -136 million for a loan to OneWeb Communications and €-226 million for the investment in Dassault Aviation. The impact in OCI for € -206 million includes the investment in OneWeb Communications and other investments. For further information on Dassault and OneWeb investments, please see “– Note 22: Other Investments and Other Long-Term Financial Assets”. Workforce adaptation In June 2020, Airbus announced plans to adapt its global workforce, principally in France, Germany, Spain and the UK, and resize its commercial aircraft activity in response to the COVID-19 crisis. This adaptation was expected to result in a reduction of around 15,000 positions no later than summer 2021. Working time adaptation and mitigation measures supported by the governments have reduced the number of positions subject to the restructuring plan. Taking into consideration the actual departures since the initial announcement, the remaining number of positions subject to the restructuring plan amounts to approximately 6,100 as of 31 December 2020, including pre- retirement headcount under German Altersteilzeit (“ATZ”). In addition, Airbus Defence and Space completed the consultation process with the Company’s European works council on the division’s planned restructuring. The plan presented to the employee representatives initially foresaw the reduction of around 1,900 positions including pre-retirement headcount under German Altersteilzeit (“ATZ”) until the end of 2021. However this number was also subsequently reduced to approximately 1,400 positions reflecting departures which occurred after the initial announcement. In November 2020, a reconciliation of Interest Agreement involving approximately 100 positions has been signed in Germany within Airbus Helicopters and hence, a provision has been recorded accordingly. As of 30 September 2020, a restructuring provision was recognised for an amount of €1.2 billion including mainly the cost of voluntary and compulsory measures taking into account management’s best estimate of the impact of the working time 2.4

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Airbus / Financial Statements 2020