Airbus - 2022 Universal Registration Document

2. Management’s Discussion and Analysis of Financial Condition and Results of Operations / 2.1 Operating and Financial Review

A350 programme. On 8 April 2020, the Company announced its decision to adapt commercial aircraft production rates to six per month for A350 in response to the new COVID-19 market environment. Subsequently, the rate for A350 was further reduced to around five per month. In 2020, 59 A350 aircraft were delivered. Given the significant production rate reduction, the A350 programme did not reach breakeven with this level of deliveries. In 2021, 55 A350 aircraft were delivered. On 28 October 2021, the Company announced the A350 programme is expected to increase from around five to around six aircraft a month in early 2023. In 2022, 60 (1) A350 aircraft were delivered. The A350 monthly rate is now around six aircraft. In order to meet growing demand for widebody aircraft as international air travel recovers, and following a feasibility study with the supply chain, the Company is now targeting a monthly production rate of nine A350s at the end of 2025. A400M programme. Developments on the A400M programme resulted in the recognition of revenues of € 1.6 billion in 2020, € 1.4 billion in 2021 and € 1.8 billion in 2022. In 2020, the Company has delivered nine aircraft. An update of the contract estimate at completion was performed and a charge of € 63 million recorded reflecting mainly the variation of price escalation indexes. In 2021, the Company has delivered eight aircraft. The COVID-19 pandemic weighed on the performance of development, production, flight testing, aircraft delivery and retrofit activities of the programme. In 2021, an update of the contract estimate at completion has been performed and an additional charge of €212 million has been recorded. This reflects mainly the updated estimates on the delivery pattern of the launch contract and the associated impact on unabsorbed costs. As of 31 December 2022, the Company has delivered a total of 115 A400M aircraft including 10 aircraft in 2022. The Company has continued with development activities toward achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. In 2022, an update of the contract Estimate At Completion has been performed and an additional charge of € 477 million recorded. This mainly reflects updated assumptions, including inflation and risks related to the remaining SOC3 contractual development milestones to be achieved. Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing export orders in time as per the revised baseline. A330 programme. In 2020, 19 A330 were delivered. On 8 April 2020, the Company announced its decision to reduce commercial aircraft production rates to around two per month for A330 in response to the new COVID-19 market environment. In 2021, 18 A330 were delivered. On 28 October 2021, the Company announced that the recent commercial success of the A330 programme enabled a monthly rate increase from around two to almost three aircraft at the end of 2022.

In 2022, 32 A330 were delivered. The A330 monthly production rate increased to around three at the end of 2022 as planned and the Company now targets to reach rate four in 2024. A220 programme. In 2020, 38 A220 aircraft were delivered. Rates were expected to increase from four to five aircraft per month from the end of the first quarter 2021. In 2021, 50 A220 aircraft were delivered. On 28 October 2021, the Company announced the A220 production rate, which was at five aircraft a month, was expected to increase to around rate six per month in early 2022. In 2022, 53 A220 aircraft were delivered and the monthly rate of 14 is envisaged by the middle of the decade. A380 programme. Airbus delivered the last five A380 aircraft in 2021 and four in 2020. As of 31 December 2018, the Company’s largest A380 operator reviewed its aircraft fleet strategy going forward and concluded it was forced to restructure and reduce its A380 order by 39 aircraft. As a consequence, the recognition of the onerous contract provision as well as other specific provisions and the remeasurement of the liabilities affected the consolidated income statement before taxes by a net €463 million in EBIT (2) and positively impacted the other financial result by € 177 million as of 31 December 2018. As a consequence and in addition to the net charge recorded in 2018, the Company recorded a net charge of €385 million in EBIT in 2020 and of € 202 million in 2019, as part of its continuous assessment of asset recoverability and review of onerous contract provision assumptions. In 2021, a positive EBIT impact of € 274 million was recorded, mainly reflecting the release of provision recorded in 2018 on the former A380 Lagardère facility that will be used for the modernised A320 FAL. Defence export ban. Defence export licences to Saudi Arabia were suspended by the German Government until 31 March 2020 and are awaiting renewal. A revised Estimate at Completion (EAC) for a customer contract was performed as of 31 December 2020, and the Company continues to engage with its customer to agree a way forward. The outcome of these negotiations is presently unclear but could result in further significant financial impacts. The year-end 2020 assessment remains unchanged as of 31 December 2021. In 2022, the Company updated its contract EAC which confirmed the 2021 position. The Company continues to engage with its customer to agree a way forward. The outcome of these actions is presently unclear but could result in further significant financial impacts. Going concern and associated liquidity measures. On 23 March 2020, the Company announced measures to bolster its liquidity and balance sheet in response to the COVID-19 pandemic, including a new € 15 billion credit facility partially termed out by bond and USPP issuances whereas the remaining portion matured on 30 September 2021, the withdrawal of 2019 dividend proposal with cash value of € 1.4 billion, the suspension of voluntary top up pension funding and strong focus on support to customers and delivery. In parallel, governmental partners supported the aerospace sector since the beginning of the

(1) After a reduction of two aircraft previously recorded as sold in December 2021 for which a transfer was not possible due to international sanctions against Russia. (2) The Company continues to use the term EBIT. EBIT is identical to profit before financial result and income taxes.

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Airbus / Universal Registration Document 2022