Airbus - Financial Statements 2022

2. Notes to the IFRS Consolidated Financial Statements Operational Assets and Liabilities

Impairment losses and provisions — For the purpose of measuring an impairment loss, each transaction is tested individually. Impairment losses relating to aircraft under operating lease and second hand aircraft for resale (included in inventory) are recognised for any excess of the aircraft’s carrying amount over the higher of the aircraft’s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on the present value of estimated future cash flows (including cash flows expected to be derived from a sale of the aircraft). Under its provisioning policy for sales financing risk, Airbus and Airbus Helicopters record provisions as liabilities for estimated risk relating to off ‑ balance sheet commitments. Security — Sales financing transactions, including those that are structured through structured entities, are generally collateralised by the underlying aircraft. Additionally, the Company benefits from protective covenants and from security packages tailored according to the perceived risk and the legal environment.

The Company endeavours to limit its sales financing exposure by sharing its risk with third parties usually involving the creation of a structured entity. Apart from investor interest protection, interposing a structured entity offers advantages such as flexibility, bankruptcy remoteness, liability containment and facilitating sell ‑ downs of the aircraft financed. An aircraft financing structured entity is typically funded on a non ‑ recourse basis by a senior lender and one or more providers of subordinated financing. When the Company acts as a lender to such structured entities, it may take the role of the senior lender or the provider of subordinated loan. The Company consolidates an aircraft financing structured entity if it is exposed to the structured entity’s variable returns and has the ability to direct the relevant remarketing activities. Otherwise, it recognises only its loan to the structured entity under other long ‑ term financial assets. At 31 December 2022 the carrying amount of its loans from aircraft financing amounts to €49 million (2021: €77 million). This amount also represents the Company’s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.

On ‑ Balance Sheet Operating and Finance Leases The future minimum operating lease payments (undiscounted) due from customers to be included in revenue, and the future minimum lease payments (undiscounted) from investments in finance leases to be received in settlement of the outstanding receivable at 31 December 2022 and 31 December 2021 are as follows:

Aircraft under operating lease

Finance lease receivables

(In € million)

Not later than one year

10

6

Later than one year and not later than five years

48

35

Later than five years

72

21

31 December 2022

130

62

Aircraft under operating lease

Finance lease receivables

(In € million)

Not later than one year

3

5

Later than one year and not later than five years

43

36

Later than five years

80

24

31 December 2021

126

65

Customer Financing Cash Flows

Direct customer financing cash flows amount to €-146 million in 2022 (2021: €28 million).

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