Airbus // Universal Registration Document 2023

Risk Factors 2 Business and Operations-related Risks

The business environment of many of the Company’s principal operating business segments is characterised by extensive research and development costs requiring significant up front investments with a high level of complexity. For the year 2023, research and development expenses were € 3.3 billion (compared to € 3.1 billion for 2022 and € 2.7 billion for 2021). Due to the technologically advanced and complex nature of the Company’s products and the long period (including ramp up time) it takes to produce them, the business plans underlying such investments often entail a long payback period to recoup these investments and assume a certain level of return over this period in order to justify the initial investment. There can be no assurance that the commercial, technical and market assumptions underlying such business plans will be met, and consequently that the payback period or returns contemplated therein will be achieved. Successful development of new programmes also depends on the Company’s ability to attract and retain engineers and other professionals with the technical skills and experience required to meet its specific needs. Demand for such employees may, depending on the current labour market, often exceed supply, resulting in intense competition for qualified professionals. The Company’s global attrition rate in 2023 was 4.1% overall (including subsidiaries) (compared to 5.0% in 2022 and 7.4% overall in 2021). There can be no assurance that the Company will attract and retain the personnel it requires to conduct its operations successfully and in particular to attract and retain engineers and other professionals with the technical skills and experience required for its research and development programmes. Failure to attract and retain such personnel or an increase in the Company’s employee turnover rate could negatively affect the Company’s ability to successfully execute More broadly, new players are operating or seeking to operate in the Company’s existing markets, which may impact the competitive structure and profitability of these markets. In addition, enterprises with different business models and alternative technologies could substitute the Company’s services and some of its products or component parts thereof. With respect to certain markets or products, competitors may have more extensive or more specialised engineering, manufacturing, support and marketing capabilities, and these competitors may develop the capability to manufacture products or provide services similar to those of the Company, in direct competition with the Company, which could have a negative impact on the Company’s revenues, future financial condition and results of operations. There can be no assurance that the Company will maintain its position in the market or compete successfully in the future, or that competition with respect to its products or services will not result in reduced revenues, market share or profit.

its research and development programmes, and more generally could negatively affect the Company’s financial condition and results of operations. The Company’s sustainability ambitions for its future generations of aerospace products face significant technological, skills and industrial challenges. These ambitions require cross industry and cross government collaboration to address the technological risks that need to be overcome. For more detailed information see “Environment, human rights, health & safety risks – Climate related risks” below. The Company continues seeking to further its development in sustainable technologies. This commitment directs a significant proportion of its longer-term technology research efforts for future products and services, and is based on solving complex problems backed by exploring multiple technology pathways. Realisation of this ambitious programme is achieved with the help of national research funding through frameworks such as CORAC (France), LUFO (Germany), ATI (UK), CDTI (Spain) and Horizon Europe, which enable the Company and the wider aviation ecosystem to mature and develop required key competencies and technologies. The loss or absence of such funding could negatively affect the Company’s ability to successfully execute its research and development programmes and could negatively affect its future prospects. For further details, please refer to section “Business and operations-related risks – Availability of government and other sources of financing”. No assurances can be given that the Company will achieve the anticipated level of returns from any of its research and development programmes and other development projects, which may negatively affect the Company’s financial condition and results of operations and competitiveness. In addition, the contracts for many aerospace and defence products are awarded, implicitly or explicitly, on the basis of home country preference or geopolitical considerations. Although the Company is a multinational company (which helps to broaden its “home” market), it may remain at a competitive disadvantage in certain countries, especially outside of Europe, relative to local competitors with respect to certain products. The strategic importance and political sensitivity of the aerospace and defence industries means that political considerations will play a role in the choice of many products and services for the foreseeable future. Further, the contracts for many aerospace and defence products and services are from time to time associated with offset or localised obligations. The Company may face difficulties to meet such obligations (especially with respect to engaging local country assets) while and at the same time optimising its industrial base and supply chain. Please also refer to “Business and operations-related risks – Dependence on public spending and on certain markets”.

Major Research and Development Programmes

Airbus Annual Report

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Universal Registration Document 2023