Airbus - 2022 Universal Registration Document

Risk Factors / 2 Business-Related Risks

Acquisitions, Divestments, Joint Ventures and Strategic Alliances

Governmental customers may request proposals and grant contracts under schemes known as public-private partnerships (“ PPPs ”). PPPs differ substantially from traditional defence equipment sales, as they often incorporate elements such as: –the provision of extensive operational services over the life of the equipment; – continued ownership and financing of the equipment by a party other than the customer, such as the equipment provider; – mandatory compliance with specific customer requirements pertaining to public accounting or government procurement regulations; and – provisions allowing for the service provider to seek additional customers for unused capacity. As part of its business strategy, the Company may acquire or divest businesses and/or form joint ventures or strategic alliances. Executing acquisitions and divestments can be difficult and costly due to the complexities inherent in integrating or carving out people, operations, technologies and products. There can be no assurance that any of the businesses that the Company intends to acquire or divest can be integrated or carved out successfully, as timely as originally planned or that they will perform well and deliver the expected synergies or cost savings once integrated or separated. In addition, regulatory, administrative, opposition by stakeholders or social partners or other contractual conditions can prevent transactions from In addition to the risk factors mentioned above, the Company also faces the following programme-specific risks that could have a material impact on the Company’s business, results of operations and financial condition. The Company faces the following main challenges on its commercial programmes: –adapt to rate and stabilise operational performance post COVID-19 while maintaining high safety and quality standards; – monitor and support the supply chain with a specific focus on engine manufacturers, especially in terms of availability and maturity of both production and in-service engines; – accompany customers and facilitate deliveries to customers including by remote delivery process; – ensure a strong customer focus to support return to operations; and –protect priority projects and deliver developments as per revised plan in an environment of increased certification scrutiny and greater complexity, including A321XLR, A220, ACJ TwentyTwo, A350 Freighter, A350-1000 ULR, A330 LMXT (KC-Y) and Digital (DDMS and Skywise). Programme-Specific Risks

being finalised. Each acquisition, divestment, joint venture and strategic alliance is very specific in its nature, purpose, risk and opportunities. The Company identifies risks through a detailed and systematic due diligence process and addresses the risks identified through price mitigation and/or appropriate contractual coverage, such as indemnification mechanisms, both being the tailored-made results of complex negotiations with the sellers/ buyers and/or partners. The Company’s business, results of operations and financial condition may be materially affected if these transactions will not be successfully completed or do not produce the expected benefits.

Public-Private Partnerships and Private Finance Initiatives

The Company is party to PPP and private finance initiatives (“ PFI ”) contracts, for example the two UK Ministry of Defence projects, Skynet 5 and related telecommunications services, and the AirTanker (“ FSTA ”). One of the complexities presented by PFIs lies in the allocation of risks and the timing thereof among different parties over the life-time of the project. There can be no assurance of the extent to which the Company will efficiently and effectively (i) compete for future PFI or PPP programmes, (ii) administer the services contemplated under the contracts, (iii) finance the acquisition of the equipment and the ongoing provision of services related thereto, or (iv) access the markets for the commercialisation of excess capacity. The Company may also encounter unexpected political, budgetary, regulatory or competitive risks over the long duration of PPP and PFI programmes. A320 Family programme. In response to the COVID-19 market environment, the commercial aircraft production rate for the A320 Family was reduced to 40 per month in June 2020. In 2021 and 2022, the Company announced demand for the A320 Family leading to a gradual increase in production for the upcoming years. The Company proactively and constantly monitors the backlog, the internal and external supply chain, including engines, so as to ensure readiness for further rate adaptations in accordance with traffic evolution, to minimise inventory levels, and secure aircraft storage capacity. In connection with the A320 Family programme, the Company faces the following challenges: ensure the A321XLR on-track development including A321XLR certification topics with primary airworthiness authorities, adapt and upgrade our industrial system and capability to meet the growing market demands and corresponding product mix within the family. Market demand for A320 Family aircraft, production and supply chain capabilities will evolve in the next few years and the Company will closely monitor these evolutions including a projected significant increase in A321 production. Attention will remain high on the overall supply chain including engines’ ramp up availability and engine maturity in-service.

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Airbus / Universal Registration Document 2022