Airbus // Universal Registration Document 2023

Risk Factors 2 Business and Operations-related Risks

Dependence on Key Suppliers and Subcontractors

The Company is dependent on the performance of numerous suppliers and subcontractors who provide the raw materials, parts, assemblies, systems, equipment and services required for the Company to manufacture and deliver its products. These suppliers and subcontractors’ financial health and ability to meet their contractual obligations may be negatively impacted by a variety of commercial factors, including the availability and cost of financing, the cost and availability of energy and raw materials (including steel and titanium and other key inputs), the ability to attract, train and retain a suitably skilled workforce, the ability to acquire certain non-commodity materials and components (such as semiconductors and electronic components) in the required quantity and time frame and at a viable cost, disruptions to transport and logistics networks and cyber security threats. Further, macroeconomic or local economic factors (including economic recessions and inflation), geopolitical conflicts causing economic or logistical disruptions, changes or tightening of export controls and other trade regulations, sanctions and embargoes, and other legal or regulatory issues (including environmental regulations) may negatively impact suppliers’ and subcontractors’ viability and ability to meet their contractual obligations. Many of the aforementioned factors continue to be exacerbated by the lingering effects of the COVID-19 pandemic. For additional information on risks that may impact our suppliers and contractors, and their ability to deliver, please also refer to: “Geopolitical, global economic and financial market risks – Global economic conditions”, “Geopolitical, global economic and The Company is currently engaged in adapting its industrial setup as it progresses towards its targeted commercial aircraft production rates. In view of the complex environment in which it operates, the Company faces challenges as it ramps up to reach its targeted rates. The Company monitors the ramp-up capabilities of the value chain (including the supply chain) for all commercial aircraft programmes. Issues arising across the value chain (including the supply chain), whether relating to raw materials, subcontracted work packages, fixtures (such as cabin equipment, buyer-furnished or otherwise), or other elements, could threaten the success of the ramp-up effort. Likewise, factors within the Company, such as human resources (right-sizing headcount and acquiring or developing the specific skills and competencies required to support the Company’s Industrial System Adaptation

financial market risks – The war in Ukraine and armed conflicts”, “Geopolitical, global economic and financial market risks – COVID-19 or other pandemic risks” and “Legal and regulatory risks” (in relation to international trade, tariffs, and sanctions). In the context described above, changes to the Company’s production or development schedules may impact suppliers and customers such that they initiate contractual claims for financial compensation or they do not fulfil their on time and on quality delivery commitments. This may have a negative effect on the financial condition and results of operations of the Company. As the Company’s global sourcing footprint extends, some suppliers (or their sub-tier suppliers) may have production facilities located in countries that are exposed to socio-political unrest, natural disasters or sanctions imposed by governmental authorities, which could interrupt deliveries. This may have a negative effect on the financial condition and results of operations of the Company. The Company cannot fully protect itself from non-performance of a supplier, including in case of external factors beyond its control, which could disrupt production and in turn may have a negative effect on the financial condition and results of operations of the Company. Nevertheless, the Company is striving to improve its supply chain resilience and has implemented a robust governance to prevent, anticipate and monitor supply chain disruption risks and efficient management of issues. ramp-up, and training and reskilling the existing workforce), resource allocation and adaptation to the complex and evolving operating environment present challenges for the Company in executing the ramp-up. While the Company is attempting to mitigate potential downside outcomes in part by building up levels of resilience to production disruptions and delays (such as by increasing inventories or certain key inputs), achieving the targeted production ramp-up depends not only on the Company effectively executing its plans, but also depends on external factors beyond the Company’s control. Failing to reach the targeted production ramp-up may have a negative effect on the financial condition and results of operations of the Company. For more details on specific programme risks, see “Business and operations-related risks – Programme-Specific Risks” below.

Technologically Advanced Products and Services

The Company offers its customers products and services that are technologically advanced, so the design and manufacturing and the components and materials utilised can be complex and may require substantial integration and coordination along the supply chain. In addition, most of the Company’s products must function under demanding operating conditions. Throughout the lifecycle of its products, the Company performs checks and inspections, which may result in modifications, retrofits or other corrective actions, each of which may have an adverse effect

on production, operations, in-service performance and may result in financial repercussions for the Company. There can be no assurance that the Company’s products or services will be successfully developed, manufactured or operated or that they will perform as intended. Certain of the Company’s contracts require it to (i) forfeit part of its expected profit, (ii) receive reduced payments, (iii) provide a replacement launch or other products or services, (iv) provide cancellation rights, or (v) reduce the price of subsequent sales to the same customer if its products fail to be

Airbus Annual Report

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Universal Registration Document 2023