Airbus // Universal Registration Document 2023

2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 2.1 Operating and Financial Review

2.1.3.3 EBIT by Business Segment

2023

2022

2021

(In €million)

Airbus

3,610

4,800

4,175

Airbus Helicopters

717 220

639

535 568

Airbus Defence and Space Subtotal segmental EBIT

(118)

4,547

5,321

5,278

Eliminations

56

4

64

Total

4,603

5,325

5,342

2023 compared to 2022. The Company’s consolidated EBIT decreased from € 5.3 billion for 2022 to € 4.6 billion for 2023, mainly driven by Airbus partly offset by Airbus Helicopters and Airbus Defence and Space. Airbus’ EBIT decreased from € 4.8 billion for 2022 to € 3.6 billion for 2023. It is mainly driven by negative foreign exchange impacts (largely related to € -1.4 billion US dollar Working Capital mismatch impact year-on-year which mainly reflects the phasing impact arising from the difference between transaction date and delivery date), higher costs due to hiring linked to the production ramp-up partly offset by higher deliveries and the release of compliance related provisions. In 2022, it included a non-recurring positive impact related to the re-measurement of past service cost in the retirement obligations and a release of compliance-related provisions. Airbus Helicopters’ EBIT increased from € 639 million for 2022 to € 717 million for 2023, reflecting the strong performance across programmes and services. FY 2022 also included net positive non-recurring elements. Airbus Defence and Space’s EBIT increased from €-118 million for 2022 to € 220 million for 2023. It includes € 0.6 billion charges resulting from the update of Estimates at Completion of certain Space programmes partially mitigated by the performance of the rest of the business. FY 2022 included some non-recurring elements, notably from the loss of the two Pleiades Neo satellites. On the A400M programme, an update of the contract “Estimate at Completion” was performed and an additional charge of € 0.5 billion recorded in 2022. 2022 compared to 2021. The Company’s consolidated EBIT remained stable at €5.3 billion for both 2022 and 2021, mainly driven by Airbus. Airbus’ EBIT increased from € 4.2 billion for 2021 to € 4.8 billion for 2022. This mainly reflects the higher commercial aircraft deliveries and is supported by some non-recurring elements related to the re-measurement of past service cost in the retirement obligations, the release of compliance-related provisions and a positive foreign exchange impact, partly offset by contract-related provisions and exceptional premium granted to employees. In 2021, it included the release of COVID-related provisions, including restructuring provision. Airbus Helicopters’ EBIT increased from €535 million for 2021 to € 639 million for 2022, mainly driven by higher services and programme execution. It also included the positive impact related to retirement obligations.

Airbus Defence and Space’s EBIT decreased from € 568 million for 2021 to € -118 million for 2022, reflecting the impairment related to the loss of two Pleiades Neo satellites in December and to delays on the Ariane 6 launcher, as well as the impact of updated assumptions in the A400M programme, including inflation and risks related to the remaining SOC3 contractual development milestones to be achieved. This was partly offset by higher volume in Military Aircraft, the ramp-up in Eurodrone and the positive impact related to retirement obligations. Foreign currency impact on EBIT. In 2023, more than 75% of the Company’s revenues are denominated in US dollars with approximately 60% of such currency exposure “naturally hedged” by US dollar-denominated costs. The remainder of costs are incurred primarily in euros and to a lesser extent, pounds sterling. Given the long-term nature of its business cycles (evidenced by its multi-year backlog), the Company covers a significant portion of its net foreign exchange exposure to mitigate the impact of exchange rate fluctuations on its EBIT. Please refer to the “Notes to the IFRS Consolidated Financial Statements – Note 37: Financial Instruments” and see “– Risk Factors – 1. Geopolitical, Global Economic and Financial Market Risks – Foreign Currency Exposure” and “– 2.1.2.5 Foreign Currency Translation”. In order to do so, the Company primarily uses two mechanisms: – – Financial instruments represented by the hedge portfolio, made of foreign exchange derivative contracts, which constitutes the main means of mitigating the impact of exchange rate fluctuations on Company’s profit. – – Euro conversion, which can be implemented at the specific request of customers. It consists of the conversion of the full or partial payment from US dollar into euro based on an agreed conversion rate and is accounted for in the IFRS Consolidated Financial Statements as a contract in euros. In addition to the impact that coverage activities have on the Company’s EBIT, the latter is also affected by the impact of revaluation of certain assets and liabilities at the closing rate and the impact of natural hedging. Since 2022 and going-forward, the Company has presented its matured hedge portfolio and euro conversion on a blended basis and therefore blended rates reflect both the EBIT impact of hedge rates of the US dollar hedge portfolio and euro conversions. During 2023, US$ 22.4 billion of forwards matured and euro conversion realised at an average blended rate of €/US$1.20. During 2022, US$ 20.3 billion of forwards matured and euro conversion realised at an average blended rate of €/US$1.22, as compared to €/US$1.21 in 2021.

176 Airbus Annual Report

Universal Registration Document 2023