Airbus - Financial Statements 2022

2. Notes to the IFRS Consolidated Financial Statements Basis of Preparation

In addition, COVID 19 continued to cause impacts on the Company’s business especially related to its sales and operations in China. This environment has further increased the Company’s exposure to supply chain disruption, already impacted by the consequences of Russia’s invasion of Ukraine (see “– Note 2: Ukraine Crisis”). This supply chain disruption caused shortage or delay of materials and parts, hampering the Company’s production ramp ‑ up. On the A320 Family programme, the ramp ‑ up trajectory has been adapted with suppliers. The Basis of preparation — The Company’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”) as endorsed by the European Union (“EU”) and Part 9 of Book 2 of the Netherlands Civil Code. When reference is made to IFRS, this intends to be EU ‑ IFRS. The Consolidated Financial Statements have been prepared on a historical cost basis, unless otherwise indicated. They are prepared and reported in euro (“€”) and all values are rounded to the nearest million appropriately. Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. The Company describes the accounting policies applied in each of the individual notes to the Financial Statements and avoids repeating the text of the standard, unless this is considered relevant to the understanding of the note’s content. The Company’s accounting policies and methods are unchanged compared to 31 December 2021. The implementation of other amended standards has no material impact on the Company’s Consolidated Financial Statements as of 31 December 2022. The most significant accounting policies are described below, and have been updated accordingly. Revenue recognition — Revenue is recognised when the Company transfers control of the promised goods or services to the customer. The Company measures revenue, for the consideration to which the Company is expected to be entitled in exchange for transferring promised goods or services. Variable considerations are included in the transaction price when it is highly probable that there will be no significant reversal of the revenue in the future. The Company identifies the various performance obligations of the contract and allocates the transaction price to these performance obligations. Advances and pre ‑ delivery payments (contract liabilities) are received in the normal course of business and are not considered to be a significant financing component as they are intended to protect the Company from the customer failing to complete its contractual obligations. 4.

Company is now progressing towards a monthly production rate of 65 aircraft by the end of 2024 and 75 in 2026. 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. 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.

Significant Accounting Policies

Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources consumed do not generate revenue as they do not contribute to the Company’s progress in satisfying the performance obligations. Revenue from the sale of commercial aircraft is recognised at a point in time ( i.e. at delivery of the aircraft). The Company estimates the amount of price concession granted by the Company’s engine suppliers to their customers as a reduction of both revenue and cost of sales. An aircraft can remain in storage under a bill ‑ and ‑ hold arrangement. In such cases, revenue is recognised when the requirements for the transfer of control under a bill ‑ and ‑ hold arrangement are fulfilled. Revenue from the sale of military aircraft, space systems and services — When control of produced goods or rendered services is transferred over time to the customer, revenue is recognised over time, i.e. under the percentage of completion method (“PoC” method). The Company transfers control over time when: it produces a good with no alternative use and the Company has an irrevocable right to payment (including a reasonable margin) for the work completed to date, in the event of contract termination at the convenience of customers ( e.g. Tiger contract); or – it creates a good which is controlled by the customer as the good is created or enhanced ( e.g. Eurofighter contracts, some border security contracts, A400M development); or – the customer simultaneously receives and consumes the benefits provided by the Company ( e.g. maintenance contracts). – For the application of the over time method (PoC method), the measurement of progress towards complete satisfaction of a performance obligation is based on inputs ( i.e. cost incurred). When none of the criteria stated above have been met, revenue is recognised at a point in time. For instance, revenue is recognised at the delivery of aircraft under IFRS 15 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters’ contracts.

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