Airbus - 2022 Universal Registration Document

Risk Factors / 2 Business-Related Risks

could have a significant adverse effect on the Company’s operations, financial condition and results of operations as well as on its reputation and on its products and services.

disruption. Effects of such events may be amplified if they happen on single points of failure (SPOFs) for which dedicated identification and mitigations are monitored. Any resulting impact on the Company’s production, services or information systems

Dependence on Key Suppliers and Subcontractors

The Company is dependent on numerous key suppliers and subcontractors to provide it with the raw materials, parts, assemblies, systems, equipment and services that it needs to manufacture and deliver its products. The Company relies upon the good performance and financial health of its suppliers and subcontractors to meet the obligations defined under their contracts. A supplier’s performance and health may be negatively impacted by a variety of topics including: the COVID-19 pandemic and its resulting economic impact; local quarantines; loss of skilled resources as a result of workforce reduction and difficulties to re-staff due to market employment tensions; need for working capital increase while state/bank loans obtained to weather the COVID-19 crisis have reached maturity in a context of inflation, high energy costs and interest rate increases; difficulty gaining access to the needed material and components, including semiconductors and electronic components in the needed quantity and time frame and at competitive conditions as well as transport and logistic means availability; energy supply shortages including as a consequence of Russia’s invasion of Ukraine; cyber security threats; geopolitical unrest; export controls evolving regulations, sanctions and embargoes; and environmental issues. The Company faces a challenging risk profile due to the adverse geopolitical and economic environment, which increases the risks concerning its ability to adapt its industrial system and increase its production rates on the commercial aircraft programmes as planned. In May 2022, the Company confirmed that commercial aircraft production for the A320 Family was progressing towards a monthly rate of 65 aircraft by early 2024, in a complex environment. Taking into account the fact that this complex environment will persist longer than previously expected, the Company announced in December 2022 that it will adjust the speed of the A320 Family ramp-up to rate 65 for 2023 and 2024, maintaining its objective to reach a monthly rate of 75 aircraft by the middle of the decade. In February 2023, the Company announced it was progressing towards a monthly production rate of 65 aircraft by the end of 2024 and 75 in 2026. In February 2023, the Company announced that, in order to meet growing demand for widebody aircraft as international air travel recovers, and following a feasibility study with the supply chain, it is now targeting a monthly production rate of 9 A350s at the end of 2025. Industrial System Adaptation

In the context described above, changes to the Company’s production or development schedules may impact suppliers and customers so that they initiate claims under their respective contracts for financial compensation or do not fulfil their on time and on quality delivery commitments. This may have a negative effect on the financial condition and results of operations of the Company. As the Company’s global sourcing footprint extends, some suppliers (or their sub-tier suppliers) may have production facilities located in countries that are exposed to socio-political unrest, natural disasters or sanctions imposed by governmental authorities which could interrupt deliveries. This may have a negative effect on the financial condition and results of operations of the Company. The Company cannot fully protect itself from non-performance of a supplier, including in case of external factors beyond its control, which could disrupt production and in turn may have a negative effect on the financial condition and results of operations of the Company. Nevertheless, the Company is striving to improve its supply chain resilience and has implemented a robust governance to prevent, anticipate and monitor supply chain disruption risks and efficient management of issues. While the Company is engaged in the process of adapting its industrial set-up in order to reach its targeted production rates, it will continue to monitor the ramp-up across the complete value chain for all commercial aircraft programmes and seek to adapt to the new complex environment. This encompasses the full industrial process, including the supply chain (raw material, subcontracted work packages, equipment, etc.) and the Company’s resource adaptation (headcount, skills and competencies). In this process, the Company focuses attention on quality industrial adherence Production Organisation Approval (POA). Acquiring the specific skills and competencies that the Company needs to support the ramp-up remains a challenging task for the human resource and management teams in the current aviation hiring environment. Taking into account the complex environment, the Company cannot fully protect itself from production disruptions and delays, which may have a negative effect on the financial condition and results of operations of the Company. For more details on specific programme risks, see “– Business related risks – Programme-Specific Risks” below.

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Airbus / Universal Registration Document 2022