Airbus - 2022 Universal Registration Document

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

2.1 Operating and Financial Review

crisis either through direct support to airlines and suppliers, or through partial unemployment schemes. With these decisions, the Company had available liquidity to cope with additional cash requirements, including the amended production rates as described above. As of 31 December 2020, the Company had a net cash position of €4.7 (3 ) billion with a total liquidity of € 33.6 billion, before deducting short-term financing liabilities. As of 31 December 2021, the Company had a net cash position of € 7.7 ( 3 ) billion with a total liquidity of € 28.7 billion, before deducting short-term financing liabilities. As of 31 December 2021, management considers the Company has sufficient resources to continue operating for at least 12 months and that there are no material uncertainties about the Company’s ability to continue as a going concern. As of 31 December 2022, the Company had a net cash position of € 9.4 ( 3 ) billion with a total liquidity of € 31.6 billion, before deducting short-term financing liabilities. As of 31 December 2022, management considers the Company has sufficient resources to continue operating for at least 12 months and that there are no material uncertainties about the Company’s ability to continue as a going concern. For further information on liquidity, see “– 2.1.6 Liquidity and Capital Resources”. Restructuring provisions. 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 amounted 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 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 was 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 adaptation and government support measures. Total payments to employees affected by the plan were expected to amount to approximately € 1.5 billion, including the settlement of other accrued employee benefits. As of 31 December 2021 and 31 December 2020, the restructuring provision in response to the COVID-19 pandemic amounted to € 0.1 billion and € 1.0 billion respectively. It reflects the utilisation of the restructuring provision for an amount of € 0.6 billion, the release of € 0.2 billion and € 0.2 billion reclassified to liabilities to reflect the progress of the plan.

As of 31 December 2022, there was no material impact. Operational assets. As of 31 December 2020 and in response to the COVID-19 pandemic, the Company performed a comprehensive review of its operational assets and liabilities taking into account the amended production rates and expected future deliveries. This review 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. As of 31 December 2021, year-to-date financials reflect deliveries as well as efforts on cost containment and competitiveness. Furthermore, the Company has performed a comprehensive review of provisions and depreciations, taking into account the amended production rates and expected future deliveries. Consequently, the Company recorded €0.6 billion of release of COVID-related provisions including restructuring in 2021. As of 31 December 2022 and as a consequence of the Ukraine crisis, the resulting recorded EBIT charge amounts to approximately € 0.1 billion, mainly relating to Airbus. Litigation. For information, see “– Information on the Company’s Activities – 1.1.7 Legal and Arbitration Proceedings” and “Notes to the IFRS Consolidated Financial Statements – Note 25: Provisions, Contingent Assets and Contingent Liabilities”. 2.1.1.4 Current Trends As the basis for its 2023 guidance, the Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services. The Company’s 2023 guidance is before M&A. On that basis, the Company targets to achieve in 2023 around: 720 commercial aircraft deliveries; EBIT Adjusted of € 6.0 billion; and Free Cash Flow before M&A and Customer Financing of € 3.0 billion. This guidance has been prepared on the basis of certain assumptions, including the principal assumptions as set out below. The principal assumptions within the Company’s control are as follows: (a) underlying commercial aircraft deliveries are based on existing orders. Revenues from other activities are also based on existing orders and may include estimates based on relevant market forecasts; (b) no significant interruption in operational performance or programme execution; (c) no disruption in or change to the development of products or other development projects; and (d) no material change to the Company’s existing capital structure. The principal assumptions outside the Company’s control are as follows: (a) no material change in general trading conditions, geopolitical stability, military tensions, economic conditions, competitive environment or levels of demand which would materially affect the Company’s business; (b) the Company’s internal operations do not suffer further disruptions or from external interruptions; (c) suppliers will meet their delivery commitments and ensure maturity, availability and in-service

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(3) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance.

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Airbus / Universal Registration Document 2022