Airbus - 2022 Universal Registration Document

Risk Factors / 1 Financial Market Risks

In addition, the Company has backstop commitments to provide financing related to orders on the Company’s and ATR’s backlog. The Company’s sales financing exposure could rise in line with future sales growth depending on the agreement reached with customers. The Company remains exposed to the risk of defaults by its customers or significant decreases in the value of the financed aircraft in the resale market, which may have a negative effect on its future financial condition and results of operations.

window date of an asset value guarantee with respect to that aircraft, the Company would be exposed to losing as much as the difference between the market value of such aircraft and the guaranteed amount, though such amounts are usually capped. Through the Airbus Asset Management department or as a result of past financing transactions, the Company is the owner of used aircraft, exposing it directly to fluctuations in the market value of these used aircraft.

Liquidity

Counterparty Credit In addition to the credit risk relating to sales financing as discussed above, the Company is exposed to credit risk to the extent of non-performance by its counterparties for financial instruments, such as hedging instruments (US$ 76.2 billion nominal value at 31 December 2022) and cash investments (€22.06 billion nominal value at 31 December 2022). However, the Company has policies in place to avoid concentrations of credit risk and to ensure that credit risk exposure is limited. Counterparties for transactions in cash, cash equivalents and securities as well as for derivative transactions are limited to highly-rated financial institutions, corporates or sovereigns. The Company is exposed to liquidity risk in case of funding needs during a market disruption situation. If the liquidity risk would materialise, the Company could be at risk of not being able to pay its creditors and shareholders in due time or could have to delay the closing of some transactions. The liquidity risk can arise when money markets and debt capital markets are closed for new issuances for a period of time. In order to mitigate this risk, the Company maintains: – significant amounts of highly liquid cash on-balance sheet; – undrawn committed credit facilities; – diversified euro funding programmes (such as a € 12 billion euro medium-term note (“ EMTN ”) programme eligible to the Corporate Sector Purchase Programme of the European Central Bank (“ ECB ”), a € 11 billion Negotiable European Commercial Paper programme eligible to the Pandemic Emergency Purchase Programme of the ECB, and a € 4 billion euro Commercial Paper programme); and

– access to US dollar funding (through a US$ 3 billion US Commercial Paper programme, and a 144A US dollar bond market). On 5 July 2022, the Company signed a new sustainability linked Revolving Syndicated Credit Facility (the “ 2022 facility ”) committed by 38 banks for € 8 billion with a maturity of five years and two extension options of one year (subject to banks’ approval). This facility incorporates an adjustment mechanism that links the applicable margin of the facility (which can go either up or down) to the achievement of annual targets for two selected sustainability key performance indicators related to environmental rating and health & safety. The 2022 facility cancels and replaces the € 6 billion Revolving Syndicated Credit Facility signed in 2020. Going forward, the Company will continue to adopt a prudent approach when it comes to managing its liquidity with the objective of maintaining its robust credit rating.

The Company’s credit limit system assigns maximum exposure lines to such counterparties, based on a minimum credit rating threshold as published by Standard & Poor’s and Moody’s. If neither is present, Fitch ratings are used. Besides the credit rating, the limit system also takes into account fundamental counterparty data, as well as sector and maturity allocations and further qualitative and quantitative criteria such as credit risk indicators. The credit exposure of the Company is reviewed on a regular basis and the respective limits are regularly monitored and updated.

As of 31 December 2022 the credit exposure had been estimated as follows (in € million) (1) :

Source of risk

Exposure Unexpected Loss Contribution

Banks

4,991

34

Corporates

4,816

104

Sovereign issuers

1,583

15

Money market funds

12,210

17

Total

23,600

170

(1) Not audited.

The Company also seeks to maintain a certain level of diversification in its portfolio between individual counterparties as well as between financial institutions, corporates and sovereigns

in order to avoid an increased concentration of credit risk on only a few counterparties.

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Airbus / Universal Registration Document 2022