The accompanying IFRS Consolidated Financial Statements present the financial position and the results of operations of\u00a0Airbus\u00a0SE\u00a0together with its subsidiaries referred to as \u201cthe Company\u201d,\u00a0European public limited-liability company (Societas Europaea)\u00a0with its seat (statutaire zetel) in Amsterdam,\u00a0The Netherlands, its registered address at\u00a0Mendelweg 30, 2333 CS Leiden,\u00a0The Netherlands, and registered with the Dutch Commercial Register (Handelsregister) under number\u00a024288945.\u00a0The Company\u2019s reportable segments are Airbus, Airbus Helicopters and Airbus Defence and Space\u00a0(see \u201c\u2013 Note\u00a012: Segment Information\u201d). The Company is listed on the European stock exchanges in Paris, Frankfurt am Main, Madrid, Barcelona, Valencia and Bilbao.\u00a0The IFRS Consolidated Financial Statements were authorised for issue by the Company\u2019s Board of Directors on 15\u00a0February 2023.
Russia\u2019s invasion of Ukraine on 24\u00a0February 2022 and the resulting export control restrictions and international sanctions against Russia, Belarus and certain Russian entities and individuals have resulted in disruption to the Company\u2019s business, its operations, data management and supply chain.
Following the imposition of export control restrictions and sanctions by the EU, the UK, the US and other countries that are relevant to the Company\u2019s business, the Company announced in March\u00a02022 it has suspended the delivery of aircraft and support services to Russian customers, as well as the supply of spare parts, equipment and software to Russia. The Company is complying with all applicable regulations and sanctions to its facilities and operations in Russia.
The crisis has increased the Company\u2019s exposure to supply chain disruption risk. Part of the titanium used by the Company is sourced from Russia, both directly and indirectly through the Company\u2019s suppliers. While geopolitical risks are integrated into the Company\u2019s titanium sourcing policies, the impact of Russia\u2019s invasion of Ukraine on the Company\u2019s ability to source materials and components and any future expansion of sanctions is continuously being reviewed.
The Company is also indirectly exposed through its partnership into the joint venture ArianeGroup. Arianespace paid and received pre-payments for the Soyuz program for which Roscosmos decided to suspend the rocket launches operated by Arianespace. Agreements have been reached on pre-payments received with two of these clients. Negotiations are well advanced with the remaining customers.
Due to the above mentioned export control restrictions and sanctions, the Company has been unable to deliver two aircraft previously recorded as sold at 31\u00a0December 2021. As a result, the associated revenues and margin have been derecognised as of 31\u00a0March 2022. These aircraft have been remarketed in the second quarter 2022.\u00a0
The Company\u2019s revenues in 2022 were not materially affected by the Ukraine crisis.
As of 31\u00a0December 2022, the resulting recorded EBIT charge amounts to approximately \u20ac\u20090.1\u00a0billion, mainly relating to Airbus.
In 2022, the Company has been operating in an adverse macroeconomic environment in light of high inflation, energy crisis, increasing interest rates, but also remaining effects of the COVID-19 pandemic.
During 2022, the Company experienced increases in its labour rates, due to wage increases but also through the distribution of exceptional premiums granted to employees to help them face inflation and the energy crisis. Furthermore, it also faced increases in raw material and energy costs. The main impacts of inflation on the Company\u2019s Consolidated Financial Statements have been assessed (see \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d). In particular, the Company concluded that the main material effect on the margin of its overtime contracts or on the provision for loss at completion of the onerous contracts recognised as of 31 December 2022 was related to its A400M contract.
Furthermore, the strengthened US dollar versus the euro had a negative impact on the mark to market valuation of the hedge portfolio, while higher interest rates led to a decrease in the bonds portfolio (for more details, see \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d and \u201c\u2013 Note\u00a026: Other Financial Assets and Other Financial Liabilities\u201d). The increase in interest rates also resulted in a decrease of the defined benefit obligations of the pension plans, only partly offset by a decline in pension plan assets (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d). Associated increases in discount rates did not result in any further long-term assets impairment charges (see \u201c\u2013 Note\u00a020: Intangible Assets\u201d).
In addition, COVID 19 continued to cause impacts on the Company\u2019s business especially related to its sales and operations in China.
This environment has further increased the Company\u2019s exposure to supply chain disruption, already impacted by the consequences of Russia\u2019s invasion of Ukraine (see \u201c\u2013 Note\u00a02: Ukraine Crisis\u201d). This supply chain disruption caused shortage or delay of materials and parts, hampering the Company\u2019s production ramp-up. On the A320 Family programme, the ramp-up trajectory has been adapted with suppliers. The 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 3 at the end of 2022 as planned and the Company now targets to reach rate 4 in 2024. The A350 monthly rate is now around 6 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 9 A350s at the end of 2025.\u00a0
Basis of preparation \u2014 The Company\u2019s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d), issued by the International Accounting Standards Board (\u201cIASB\u201d) as endorsed by the European Union (\u201cEU\u201d) 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 (\u201c\u20ac\u201d) 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\u2019s content. The Company\u2019s accounting policies and methods are unchanged compared to 31\u00a0December 2021. The implementation of other amended standards has no material impact on the Company\u2019s Consolidated Financial Statements as of 31\u00a0December 2022. The most significant accounting policies are described below, and have been updated accordingly.
Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.
Provisions for onerous contracts \u2014 The Company records provisions for onerous contracts when it becomes probable that the total contract costs will exceed total contract revenue. Before a provision for onerous contracts is recorded, the related assets under construction are measured at their net realisable value and written-off if necessary. Onerous contracts are identified by monitoring the progress of the contract together with the underlying programme status. An estimate of the related contract costs is made, which requires significant and complex assumptions, judgements and estimates related to achieving certain performance standards (see \u201c\u2013 Note\u00a05: Key Estimates and Judgements\u201d, \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d and \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
Research and development expenses \u2014 The costs for internally generated research are expensed when incurred. The costs for internally generated development are capitalised when:
Income tax credits granted for research and development activities are deducted from corresponding expenses or from capitalised amounts when earned.
Capitalised development costs, are recognised either as intangible assets or, when the related development activities lead to the construction of specialised tooling for production (\u201cjigs and tools\u201d), or involve the design, construction and testing of prototypes and models, as property, plant and equipment. Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, they are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales.
Inventories are measured at the lower of acquisition cost (generally the average cost) or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labour, and production related overheads (based on normal operating capacity and normal consumption of material, labour and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs to complete the sale.
Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated into functional currency at the foreign exchange rate in effect at the date of the transaction. Translation differences on non\u2011monetary financial assets and liabilities that are measured at fair value are reported as part of the fair value gain or loss. However, translation differences of non\u2011monetary financial assets measured at fair value and classified as fair value through other comprehensive income (\u201cOCI\u201d) are included in accumulated other comprehensive income (\u201cAOCI\u201d).
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.
The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:
Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.
Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.
The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).
Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.
Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).
Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).
Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).
Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.
Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.
The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).
Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
The accounting policies applied by the Company in preparation of its 2022\u00a0year-end Consolidated Financial Statements are the same as applied for the previous year. Other than that, amendments, improvements to and interpretations of standards effective from 1\u00a0January 2022 have no material impact on the Consolidated Financial Statements.
In April\u00a02021, IFRS\u00a0IC published an agenda decision, \u201cConfiguration or Customisation Costs in a Cloud Computing Arrangement\u201d, which considered how an entity should account for configuration and customisation costs incurred in implementing these service arrangements.
IFRS\u00a0IC concluded that these costs should be expensed, unless the criteria for recognising a separate asset are met. The Company did not perform significant configuration or customisation on its software-as-a-service contracts. As a consequence, the IFRS\u00a0IC decision has no significant impact on the Consolidated Financial Statements as of 31\u00a0December 2022.
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31\u00a0December 2022 and have not been applied in preparing these Consolidated Financial Statements and early adoption is not planned:
Standards and related amendments | IASB effective date | Endorsement |
|---|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Presentation of Financial Statements and IFRS Practice\u00a0 | 1\u00a0January 2023 | Endorsed |
Amendments to IAS 8:\u00a0 Definition of Accounting Estimates | 1 January 2023 | Endorsed |
Amendments to IAS\u00a012: Deferred Tax related to Assets and Liabilities arising from a Single Transaction | 1\u00a0January 2023 | Endorsed |
Amendments to IFRS\u00a017: Initial Application of IFRS\u00a017 and IFRS\u00a09 \u2013 Comparative Information | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Classification of Liabilities as Current or Non-current | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IAS\u00a01: Non-current Liabilities with Covenants | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IFRS\u00a016: Lease Liability in a Sale and Leaseback | 1\u00a0January 2024 | Not yet endorsed |
Climate change may have a major impact on both the Company\u2019s industrial operations and its upstream and downstream value chains, including aircraft direct operations and the wider air transport ecosystem. Accordingly, climate-related risks can potentially affect the Company\u2019s business and competitiveness, its customers and other actors in the aviation industry. For more details, please refer to the Risk Factors in the Report of the Board of Directors \u2013 4.6 Risk Factors \u2013 Climate-Related Risks.
As of 31\u00a0December 2022, to the best of the Company\u2019s judgment, there is no material impact on the Company\u2019s assets and liabilities. The Company considered the assumptions related to the life cycle of its programmes and the related impacts on long-lived assets \u00a0and concluded that there is no need for impairment.
Similarly, the Company did not identify any need for revision to the useful lives of the property, plant and equipment and intangible assets.
For more detailed information, see \u201c\u2013 Note\u00a020: Intangible assets\u201d and \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d.
This is supported by the current demand for the Company\u2019s products as demonstrated by its order backlog. As it relates to commercial aircraft, the Company\u2019s current portfolio already delivers significant CO2 reduction when compared to the previous generation aircraft. Around 75% of the global commercial aircraft fleet is made up of older generation aircraft, therefore, renewing the fleet represents an immediate potential for aviation decarbonisation. Furthermore, the Company expects its commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% Sustainable Aviation Fuels (SAF) by 2030 will play an important role in the sector\u2019s decarbonisation journey.
The Company has received approval from the Science Based Targets initiative (SBTi) for its greenhouse gas emission reduction near-term targets. These targets, in line with the Paris agreement\u2019s objectives, are based on climate science and cover the full set of the Company\u2019s emissions. Airbus intends to reduce its Scope 1 and Scope 2 industrial emissions by up to 63% by 2030, in line with a 1.5\u00b0C pathway. The Company also committed to reducing by 46% the greenhouse gas emissions intensity generated by its commercial aircraft in service (Scope 3\u00a0- Use of Sold Product) by 2035.
In support of the overall sector ambition, the Company is investing in and accelerating its efforts on complementary strategic pathways to reduce its environmental footprint. Overall, a major portion of the Company capital expenditures, research & technology, and research & development expenses is linked to its commercial aircraft activities and the realisation of five decarbonisation pathways (see Report of the Board of Directors \u2013 6.1.2 \u2013 Climate change). In 2022, the total research & development expenses amounted to \u20ac\u20093.1\u00a0billion (2021: \u20ac\u20092.7\u00a0billion).
Consolidation \u2014 The Company\u2019s Consolidated Financial Statements include the Financial Statements of Airbus\u00a0SE and all material subsidiaries controlled by the Company. The Company\u2019s subsidiaries prepare their Financial Statements at the same reporting date as the Company\u2019s Consolidated Financial Statements (see Appendix \u201cSimplified Airbus Structure\u201d chart).
Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.
The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.
(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
Business combinations are accounted for using the acquisition method, as at the acquisition date, which is the date on which control is transferred to the Company.
The determination of the fair value of the acquired assets and the assumed liabilities which are the basis for the measurement of goodwill requires key estimates. Land, buildings and equipment are usually independently appraised while marketable securities are valued at market prices. If intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company either consults with an independent external valuation expert or develops the fair value internally, using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows.
These evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied.
Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.
Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.
On 20\u00a0June 2022, a Share Purchase Agreement has been signed between a consortium composed of the Company, Safran and Tikehau ACE Capital, and Eramet for the acquisition of its subsidiary Aubert & Duval. The acquisition, which remains subject to certain conditions precedent including regulatory approvals, is expected to be completed in early 2023.
On 20\u00a0July 2022, Satair USA,\u00a0Inc. signed a Membership Interest Purchase Agreement under which it acquired 100% of the shares of VAS Aero Services,\u00a0LLC. VAS Aero Services provides aviation logistics and aftermarket services including end-of-life support. A preliminary goodwill of \u20ac\u200967\u00a0million is recognised as of 31\u00a0December 2022 and the one year window period for the completion of the purchase price allocation will end in June\u00a02023.
On 31\u00a0December 2022, Airbus Helicopters Deutschland\u00a0GmbH acquired\u00a0100% of the shares of ZF Luftfahrttechnik\u00a0GmbH. ZF Luftfahrttechnik was subsequently renamed Airbus Helicopters Technik\u00a0GmbH. The company is a manufacturer of dynamic components for light and medium helicopters and a maintenance, repair, and overhaul service partner for helicopter fleet. A preliminary goodwill of \u20ac\u200960\u00a0million is recognised as of 31\u00a0December 2022 and the one year window period for the completion of the purchase price allocation will end in December\u00a02023.
The following table provides details on cash flows from disposals (resulting in assets and liabilities disposed) of subsidiaries, joint ventures and businesses:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Total selling price received by cash and cash equivalents | 0 | 310 |
Cash and cash equivalents included in the disposed subsidiaries | 0 | 0 |
Total | 0 | 310 |
In 2021, the aggregate cash flows from assets and disposals groups classified as held for sale resulted from the divestment of one of its sites in France.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Investments in joint ventures | 1,686 | 1,471 |
Investments in associates | 381 | 201 |
Total | 2,067 | 1,672 |
Investments accounted for under the equity method increased by \u20ac\u2009+395\u00a0million to \u20ac\u20092,067\u00a0million (2021: \u20ac\u20091,672\u00a0million). They mainly include the equity investments in ArianeGroup, MBDA and ATR GIE.
The joint ventures in which the Company holds an interest are structured in separate incorporated companies. Under joint arrangement agreements, unanimous consent is required from all parties to the agreement for all relevant activities. The Company and its partners have rights to the net assets of these entities through the terms of the contractual agreements.
The Company\u2019s interest in its joint ventures, accounted for under the equity method, is stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investments at 1\u00a0January | 1,471 | 1,367 |
New joint ventures | 0 | 49 |
Share of results from continuing operations | 99 | 73 |
Share of other comprehensive income | 173 | 116 |
Dividends received during the year | (99) | (70) |
Capital increase (decrease) | 36 | 76 |
Changes in consolidation | 0 | (28) |
Others | 6 | (112) |
Carrying amount of the investments at 31\u00a0December | 1,686 | 1,471 |
The Company\u2019s individually material joint ventures are ArianeGroup, Paris (France), MBDA\u00a0S.A.S., Paris (France), and ATR GIE, Blagnac (France), as parent companies of their respective groups. These joint venture companies are not publicly listed.
ArianeGroup is a 50% joint venture between the Company and Safran. ArianeGroup is the head company in a group comprising several subsidiaries and affiliates, such as: APP, Arianespace, Eurocryospace, Europropulsion, Nucl\u00e9tudes, Pyroalliance, Regulus and Sodern. ArianeGroup inherits a rich portfolio of products and services, enabling it to deliver innovative and competitive solutions to numerous customers around the world. In 2022, ArianeGroup has been strongly impacted by the Ukraine crisis. All Soyuz flights operated by Arianespace and Starsem have been canceled since 24 February 2022 (see \u201c\u2013 Note 2: Ukraine Crisis\u201d). In addition, ArianeGroup has announced the postponement of the inaugural flight of the Ariane 6 launcher to the end of 2023.
The Company holds a 37.5% stake in MBDA at 31\u00a0December 2022, which is a joint venture between the Company, BAE Systems and Leonardo. MBDA offers missile systems capabilities that cover the whole range of solutions for air dominance, ground-based air defence and maritime superiority, as well as advanced technological solutions for battlefield engagement.
ATR GIE manufactures advanced turboprop aircraft. It is a 50% joint venture between Leonardo and the Company. Both Leonardo and the Company provide airframes which are assembled by ATR GIE in France. The members of ATR GIE are legally entitled exclusively to the benefits and are liable for the commitments of the joint venture. ATR GIE is obliged to transfer its cash to each member of the joint venture.\u00a0
The following table summarises financial information for ArianeGroup, MBDA and ATR GIE based on their Consolidated Financial Statements prepared in accordance with IFRS:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Revenue | 2,357 | 3,129 | 4,210 | 4,234 | 852 | 707 |
Depreciation and amortisation | (153) | (157) | (199) | (165) | 3 | 21 |
Interest income | 2 | 1 | 39 | 8 | 0 | 0 |
Interest expense | (23) | (12) | (25) | (13) | 0 | 0 |
Income tax expense | (19) | 40 | (123) | (112) | (2) | 0 |
Profit (loss) from continuing operations | 19 | (39) | 386 | 344 | (11) | (48) |
Other comprehensive income | 70 | 15 | 316 | 266 | 0 | 0 |
Total comprehensive income (100%) | 89 | (24) | 702 | 610 | (11) | (48) |
Non-current assets | 6,086 | 6,129 | 2,748 | 2,727 | 239 | 267 |
Current assets | 6,841 | 6,466 | 8,160 | 7,849 | 785 | 720 |
thereof cash and cash equivalents | 1,409 | 1,223 | 2,987 | 2,819 | 4 | 6 |
Non-current liabilities | 909 | 1,008 | 206 | 766 | 75 | 203 |
thereof non-current financial liabilities | 358 | 423 | 11 | 6 | 0 | 0 |
Current liabilities | 7,790 | 7,451 | 9,171 | 8,733 | 748 | 662 |
thereof current financial liabilities | 59 | 129 | 22 | 21 | 0 | 0 |
Total equity (100%) | 4,228 | 4,136 | 1,531 | 1,077 | 201 | 122 |
Equity attributable to the equity owners of the parent | 4,230 | 4,126 | 1,531 | 1,077 | 201 | 122 |
Non-controlling interests | (2) | 10 | 0 | 0 | 0 | 0 |
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
The Company\u2019s interest in equity on investee | 2,115 | 2,063 | 575 | 404 | 100 | 61 |
Goodwill | 244 | 244 | 282 | 282 | 0 | 0 |
PPA adjustments, net of tax | (1,709) | (1,640) | 0 | 0 | 0 | 0 |
Contingent liability release adjustment | (36) | (36) | 0 | 0 | 0 | 0 |
Fair value adjustments and modifications for differences in accounting policies | (93) | (101) | (10) | (10) | 0 | 0 |
Elimination of downstream inventory | 2 | 2 | 0 | 0 | (4) | (5) |
Other | 0 | 0 | 0 | 0 | (3) | 3 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The development of these investments is as follows:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Carrying amount of the investment at 1\u00a0January | 532 | 669 | 676 | 498 | 59 | 10 |
Share of results from continuing operations | (47) | (66) | 146 | 130 | (5) | (23) |
Share of other comprehensive income | 38 | 5 | 117 | 99 | 8 | (4) |
Dividends received during the year | 0 | 0 | (92) | (49) | 0 | 0 |
Capital increase (decrease) | 0 | 0 | 0 | 0 | 36 | 76 |
Changes in consolidation | 0 | 5 | 0 | 0 | 0 | 0 |
Others | 0 | (81) | 0 | (2) | (5) | 0 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The Company\u2019s share of contingent liabilities and other commitments as of 31\u00a0December 2022 relating to MBDA is \u20ac\u2009500\u00a0million (2021: \u20ac\u2009393\u00a0million).
The Company\u2019s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investment at 1\u00a0January | 201 | 211 |
Share of results from continuing operations | 35 | (33) |
Share of other comprehensive income | 138 | 30 |
Dividends received during the year | (1) | (6) |
Changes in consolidation | 6 | 0 |
Others | 2 | (1) |
Carrying amount of the investment at 31\u00a0December | 381 | 201 |
The cumulative unrecognised comprehensive loss for these associates amounts to \u20ac\u20090\u00a0million and \u20ac\u2009-12\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
(In \u20ac million) | Sales of goods and services and other income | Purchases of goods and services and other expenses | Receivables at | Liabilities at | Loans granted / Other receivables due at | Loans received / Other liabilities due at 31 December |
|---|---|---|---|---|---|---|
2022 | ||||||
Total transactions\u00a0 | 20 | 177 | 2 | (0) | 96 | 32 |
Total transactions\u00a0 | 3,073 | 206 | 1,273 | 1,199 | 2 | 1,692 |
2021 | ||||||
Total transactions\u00a0 | 7 | 132 | 3 | 22 | 108 | 0 |
Total transactions\u00a0 | 2,807 | 212 | 930 | 1,239 | 0 | 1,410 |
Transactions with unconsolidated subsidiaries are immaterial to the Company\u2019s Consolidated Financial Statements.
As of 31\u00a0December 2022, the Company granted guarantees of \u20ac\u2009129\u00a0million to Air Tanker Group in the UK (2021: \u20ac\u2009129\u00a0million) and \u20ac 225 million to NHIndustries in France (2021: \u20ac 225 million).
For information regarding the funding of the Company\u2019s pension plans, which are considered as related parties, see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d.
The information relative to compensation and benefits granted to Members of the Executive Committee and Board of Directors are disclosed in \u201c\u2013 Note\u00a034: Remuneration\u201d.
The Company operates in three reportable segments which reflect the internal organisational and management structure according to the nature of the products and services provided.
On 1\u00a0January 2022, Airbus Atlantic, a\u00a0wholly-owned Airbus subsidiary,\u00a0was established. The new company groups the strengths, resources and skills of Airbus\u2019s sites in Nantes and Montoir-de-Bretagne, the central functions associated with their activities, as well as the STELIA Aerospace sites worldwide.
This unification is part of the transformation project announced in April\u00a02021, aimed at strengthening the value chain of aerostructure assembly within Airbus\u2019s industrial setup.
In addition, Airbus Aerostructures\u00a0GmbH was established on 1\u00a0July 2022. The new wholly-owned Airbus subsidiary manages and delivers large structural components to Airbus. It includes four production sites in Germany: the Hamburg plant and headquarters, the plant in Stade, and the former Premium AEROTEC plants of Nordenham and Bremen. Adjacent Premium AEROTEC sites in Augsburg, Varel and Bra\u015fov will initially remain in Premium AEROTEC\u00a0GmbH and are planned to undergo restructuring and, upon successful restructuring, to be integrated into Airbus Aerostructures\u00a0GmbH by 30\u00a0June 2025.
These have no impact on the segment structure described above.
The following tables present information with respect to the Company\u2019s business segments. As a rule, inter-segment transfers are carried out on an arm\u2019s length basis. Inter-segment sales predominantly take place between Airbus and Airbus Defence and Space and between Airbus Helicopters and Airbus. Consolidation effects are reported in the column \u201cEliminations\u201d.
The Company uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended 31\u00a0December 2022 is as follows:
(In \u20ac million) | Airbus | Airbus Helicopters | Airbus | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Total revenue | 41,428 | 7,048 | 11,259 | 0 | 59,735 |
Internal revenue | (622) | (291) | (59) | 0 | (972) |
Revenue | 40,806 | 6,757 | 11,200 | 0 | 58,763 |
thereof | |||||
sales of goods at a point in time | 37,681 | 3,429 | 3,369 | 0 | 44,479 |
sales of goods over time | 18 | 310 | 4,115 | 0 | 4,443 |
services, including sales of spare parts | 3,107 | 3,018 | 3,716 | 0 | 9,841 |
Profit before financial result and income taxes (EBIT) | 4,800 | 639 | (118) | 4 | 5,325 |
thereof | |||||
depreciation and amortisation | (1,571) | (189) | (961) | 5 | (2,716) |
research and development expenses | (2,607) | (275) | (266) | 69 | (3,079) |
share of profit from investments accounted for under the equity method | (4) | 6 | 132 | 0 | 134 |
additions to other provisions\u00a0(1) | (1,035) | (342) | (788) | (19) | (2,184) |
Interest result | (232) | ||||
Other financial result | (18) | ||||
Income taxes | (939) | ||||
Profit for the period | 4,136 | ||||
(1) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
Business segment information for the year ended 31\u00a0December 2021 is as follows:
(In \u20ac million) | Airbus | Airbus Helicopters | Airbus | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Total revenue | 36,164 | 6,509 | 10,186 | 0 | 52,859 |
Internal revenue | (425) | (230) | (55) | 0 | (710) |
Revenue | 35,739 | 6,279 | 10,131 | 0 | 52,149 |
thereof | |||||
sales of goods at a point in time | 33,455 | 3,298 | 3,076 | 0 | 39,829 |
sales of goods over time | 20 | 192 | 3,557 | 0 | 3,769 |
services, including sales of spare parts | 2,264 | 2,789 | 3,498 | 0 | 8,551 |
Profit before financial result and income taxes (EBIT) | 4,175 | 535 | 568 | 64 | 5,342 |
thereof | |||||
depreciation and amortisation | (1,616) | (184) | (525) | 0 | (2,325) |
research and development expenses | (2,252) | (275) | (249) | 30 | (2,746) |
share of profit from investments accounted for under the equity method | (29) | 0 | 69 | 0 | 40 |
additions to other provisions | (989) | (398) | (870) | 27 | (2,230) |
Interest result | (246) | ||||
Other financial result | (69) | ||||
Income taxes | (853) | ||||
Profit for the period | 4,174 |
Segment capital expenditures (In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Airbus | 1,730 | 1,270 |
Airbus Helicopters | 183 | 175 |
Airbus Defence and Space | 551 | 483 |
Eliminations | 0 | 0 |
Total capital expenditures\u00a0(1) | 2,464 | 1,928 |
(1) Excluding expenditure for leased assets. |
Segment assets (In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Airbus | 68,367 | 60,673 |
Airbus Helicopters | 9,262 | 8,500 |
Airbus Defence and Space | 17,835 | 17,081 |
Eliminations | (8,505) | (6,765) |
Total segment assets | 86,959 | 79,489 |
Unallocated | ||
Deferred and current tax assets | 5,387 | 4,875 |
Securities | 7,775 | 8,111 |
Cash and cash equivalents | 15,823 | 14,572 |
Assets classified as held for sale | 0 | 0 |
Total assets | 115,944 | 107,047 |
Revenue by geographical areas is disclosed in \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d. Property, plant and equipment by geographical areas is disclosed in \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d.\u00a0
Segment order backlog | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
(In \u20ac million) | (in %) | (In \u20ac million) | (in %) | |
Airbus | 390,456 | 86 | 345,101 | 87 |
Airbus Helicopters | 20,774 | 5 | 17,985 | 4 |
Airbus Defence and Space | 38,426 | 9 | 36,131 | 9 |
Eliminations | (415) | 0 | (778) | 0 |
Total | 449,241 | 100 | 398,439 | 100 |
As of 31\u00a0December 2022, the total backlog represents the aggregate amount of the transaction price allocated to the unsatisfied and partially unsatisfied performance obligations to the Company\u2019s customers. Backlog commitments are relative to the Company\u2019s enforceable contracts with its customers where it is probable that the consideration will be collected. As a result, contractual rebates, engines concessions, and variable considerations are taken into consideration for measurement. Contracts stipulated in a currency different than the presentation currency are translated to euro using the spot rate as of 31\u00a0December 2022 and 2021 respectively. Adjustments to the value of the backlog could result from changes in the transaction price. The backlog will mainly be released into revenue over a period of eight years.
The increase mainly reflects a book to bill above one and the strengthening of the US dollar. In Airbus, total\u00a0gross commercial aircraft\u00a0orders amount to 1078 units (2021: 771 units)\u00a0with net orders of 820 aircraft after cancellations (2021: 507 aircraft)\u00a0and total deliveries amount to 661 units (2021: 611 units) as of 31\u00a0December 2022.
Revenue\u00a0increased by\u00a0\u20ac\u2009+6,614\u00a0million to \u20ac\u200958,763\u00a0million (2021: \u20ac\u200952,149\u00a0million). The increase is mainly driven by higher aircraft deliveries of 661 aircraft (in 2021: 611 aircraft) and higher contributions from Airbus Defence and Space and Airbus Helicopters. It also reflects a positive foreign exchange impact at Airbus.
Revenue by geographical areas based on the location of the customer is as follows:\u00a0
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Europe | 24,261 | 19,490 |
Asia-Pacific | 15,380 | 15,970 |
North America | 13,549 | 10,546 |
Middle East | 2,598 | 2,256 |
Latin America | 2,086 | 980 |
Other countries | 889 | 2,907 |
Total | 58,763 | 52,149 |
The gross margin increased by \u20ac\u2009+940\u00a0million to \u20ac\u200910,571\u00a0million compared to \u20ac\u20099,631\u00a0million in 2021, mainly driven by higher aircraft deliveries. It includes a non-recurring positive impact related to the re-measurement of past service cost in the retirement obligations of \u20ac\u00a00.4\u00a0billion and the release of compliance-related provisions of \u20ac\u20090.3\u00a0billion (see \u201c\u2013 Note\u00a025: Provisions\u201d), offset by additional losses on A400M of \u20ac\u20090.5\u00a0billion, contract-related provisions of \u20ac\u20090.3\u00a0billion and exceptional premium granted to employees of \u20ac\u20090.3\u00a0billion. The gross margin rate decreased from 18.5% to 18%.
The Company has performed an assessment of the impacts of inflation which mainly relate to the overtime contracts within Airbus Defence and Space, in particular the A400M programme for \u20ac\u20090.2\u00a0billion.
In 2022, the Company has delivered a total of 115 A400M aircraft including 10 aircraft in 2022.
The Company has continued with development activities toward achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer.
In 2021, an update of the contract Estimate At Completion (EAC) was performed and an additional charge of \u20ac\u2009212\u00a0million recorded reflecting mainly the updated estimates on the delivery pattern of the launch contract and the associated impact on unabsorbed costs.\u00a0In 2022, an update of the contract EAC has been performed and an additional charge of \u20ac\u2009477\u00a0million recorded. This mainly reflects updated assumptions, including inflation and risks related to the remaining SOC3\u00a0contractual development milestones to be achieved.
Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing export orders in time as per the revised baseline.
Defence export licences to Saudi Arabia were suspended by the German Government until 31\u00a0March 2020 and are awaiting renewal. In 2022, the Company updated its contract EAC which confirmed the 2021 position. The Company continues to engage with its customer to agree a way forward. The outcome of these actions is presently unclear but could result in further significant financial impacts.
In a notice of termination dated 9\u00a0June 2022, the Norwegian Defence Material Agency notified NHIndustries\u00a0SAS (\u201cNHI\u201d) of the Norwegian Ministry of Defence\u2019s decision to terminate its contract for the supply of 14 NH90 helicopters. In a press release dated 10\u00a0June 2022, NHI noted it \u201cis extremely disappointed by the decision taken by the Norwegian Ministry of Defence and refutes the allegations being made against the NH90 as well as against [NHI].\u201d NHI considers the termination to be legally groundless and reserves its right to take any necessary legal action to challenge it. The parties are engaging in discussions with a view to resolve this matter.
Research and development expenses increased by \u20ac\u2009333\u00a0million to \u20ac\u20093,079\u00a0million compared to \u20ac\u20092,746\u00a0million in 2021.
Other income decreased by \u20ac\u2009-123\u00a0million to \u20ac\u2009471\u00a0million compared to \u20ac\u2009594\u00a0million in 2021. In 2022, it includes an insurance income of \u20ac\u2009200\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d). In 2021, it included a restructuring provision release of \u20ac\u2009207\u00a0million and the gain of \u20ac\u2009122\u00a0million for the divestment of one of its sites to a joint venture.
Other expenses increased by \u20ac\u2009389\u00a0million to \u20ac\u2009-590\u00a0million compared to \u20ac\u2009-201\u00a0million in 2021, mainly due to the impact of \u20ac -437\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d).
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Share of profit from investments in joint ventures | 99 | 73 |
Share of profit from investments in associates | 35 | (33) |
Share of profit from investments accounted for under the equity method | 134 | 40 |
Other income from investments | 58 | 76 |
Share of profit from investments under the equity method and other income from investments increased by \u20ac\u200976\u00a0million to \u20ac\u2009192\u00a0million compared to \u20ac\u2009116\u00a0million in 2021, mainly linked to higher share of result from equity investments, partly offset by the dividends received in 2021 from other investments classified at fair value through OCI.
Interest income derived from the Company\u2019s asset management and lending activities is recognised as interest accrues, using the effective interest rate method.
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
Total financial result\u00a0improved by \u20ac +65\u00a0million to \u20ac -250\u00a0million compared to \u20ac -315\u00a0million in 2021. This is mainly driven by\u00a0the revaluation of certain equity investments (see \u201c\u2013 Note\u00a022: Other Investments and Other Long-Term Financial Assets\u201d) and a net positive impact from the revaluation of financial instruments partly offset by the negative impact from the foreign exchange valuation of monetary items.
The expense for income taxes is comprised of the following:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Current tax expense | (536) | (348) |
Deferred tax expense | (403) | (505) |
Total | (939) | (853) |
Main income tax rates and main changes impacting the Company:
(Rate in %) | 2022 | 2023 | > 2024 |
|---|---|---|---|
Netherlands | 25.80 | 25.80 | 25.80 |
France | 25.83 | 25.83 | 25.83 |
Germany | 30.00 | 30.00 | 30.00 |
Spain | 25.00 | 25.00 | 25.00 |
UK\u00a0(1) | 19.00 | 25.00 | 25.00 |
(1) A tax law has been enacted in 2022 increasing the rate for income taxes to 25.00% from April\u00a02023 and beyond. |
The following table shows a reconciliation from the theoretical income tax (expense) using the Dutch corporate tax rate to the reported income tax (expense):
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Profit before income taxes | 5,075 | 5,027 |
Corporate income tax rate | 25.8% | 25.0% |
Expected (expense) for income taxes | (1,309) | (1,257) |
Effects from tax rate differentials / Change of tax rate | 39 | (103) |
Capital gains and losses on disposals / mergers | 0 | 5 |
Income from investment and associates | 29 | 23 |
Tax credit | 41 | 53 |
Change in valuation allowances\u00a0(1) | 53 | 116 |
Tax contingencies | 156 | 186 |
Other non-deductible expenses and tax-free income | 52 | 124 |
Reported tax (expense) | (939) | (853) |
(1) Reassessments of the recoverability of deferred tax assets based on future taxable profits. |
The\u00a0income tax\u00a0expense amounts to \u20ac\u2009-939\u00a0million (2021: \u20ac\u2009-853\u00a0million) and corresponds to an effective income tax rate of 18.5%. This includes impacts on the tax-free revaluation of certain equity investments under IFRS\u00a09, tax risk updates and deferred tax asset impairments. In addition, the establishment of Airbus Aerostructures\u00a0GmbH and the restructuring of Premium AEROTEC\u00a0GmbH (see \u201c \u2013 Note\u00a012: Segment Information\u201d) led to a release of deferred tax asset impairment of \u20ac\u2009536\u00a0million out of which \u20ac\u2009336\u00a0million recorded in the income statement and \u20ac\u2009200\u00a0million in other comprehensive income.
In 2021, the effective tax rate included positive impacts from tax risk updates,\u00a0the tax-free revaluation of certain equity investments under IFRS\u00a09\u00a0and a net release of deferred tax asset impairments mainly due to an updated business outlook.
As the Company controls the timing of the reversal of temporary differences associated with its subsidiaries (usually referred to as \u201coutside basis differences\u201d) arising from yet undistributed profits and changes in foreign exchange rates, it does not recognise a deferred tax liability. For temporary differences arising from investments in associates the Company recognises deferred tax liabilities. The rate used reflects the assumptions that these differences will be recovered from dividend distribution unless a management resolution for the divestment of the investment exists at the closing date. For joint ventures, the Company assesses its ability to control the distribution of dividends based on existing shareholder agreements and recognises deferred tax liabilities accordingly.
As of 31\u00a0December 2022, the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to \u20ac\u2009172\u00a0million.
Deferred taxes on net operating losses (\u201cNOLs\u201d), trade tax loss carry forwards and tax credit carry forwards are:
(In \u20ac million) | France | Germany | Spain | UK | Other | 31 December | 31 December |
|---|---|---|---|---|---|---|---|
NOL | 60 | 3,429 | 94 | 1,130 | 3,448 | 8,161 | 8,285 |
Trade tax loss carry forwards | 0 | 3,719 | 0 | 0 | 0 | 3,719 | 3,530 |
Tax credit carry forwards | 0 | 0 | 223 | 0 | 2 | 225 | 221 |
Tax effect | 15 | 1,069 | 246 | 283 | 893 | 2,506 | 2,519 |
Valuation allowances | (12) | (587) | (127) | (92) | (852) | (1,670) | (2,001) |
Deferred tax assets on NOLs and tax credit carry forwards | 3 | 482 | 119 | 191 | 41 | 836 | 518 |
NOLs, capital losses and trade tax loss carry forwards are indefinitely usable under certain restrictions in France, Germany, the UK and Spain. They are usable for 20\u00a0years in Canada. In Spain, R&D tax credit carry forwards will expire after 18\u00a0years.
Roll forward of deferred tax:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Net deferred tax assets at 1\u00a0January | 4,207 | 3,572 |
Deferred tax expense in income statement | (403) | (505) |
Deferred tax recognised directly in AOCI | 935 | 1,435 |
Deferred tax on remeasurement of the net defined benefit pension plans | (320) | (368) |
Others | 100 | 73 |
Net deferred tax assets at 31\u00a0December | 4,519 | 4,207 |
Details of deferred tax recognised cumulatively in equity are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets at fair value through OCI | (24) | (102) |
Cash flow hedges | 2,180 | 1,323 |
Deferred tax on remeasurement of the net defined benefit pension plans | 1,806 | 2,126 |
Total | 3,962 | 3,347 |
Deferred income taxes as of 31\u00a0December 2022 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2022 | Other movements | Movement through income statement | 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 249 | (551) | 0 | (26) | 0 | 41 | 305 | (592) |
Property, plant and equipment | 49 | (813) | 0 | (1) | 0 | (281) | 76 | (1,122) |
Investments and other long-term financial assets | 1,221 | (108) | 0 | 6 | 0 | 304 | 1,497 | (74) |
Inventories | 3,658 | (1,493) | 0 | (1) | 0 | 478 | 3,745 | (1,103) |
Receivables and other assets | 806 | (1,489) | 1,986 | 4 | 0 | (2,721) | 13 | (1,427) |
Prepaid expenses | 11 | (3) | 0 | (1) | 0 | 3 | 10 | 0 |
Provisions for retirement plans | 1,071 | 12 | (770) | 43 | 0 | (54) | 580 | (278) |
Other provisions | 754 | (137) | 0 | 24 | 0 | (694) | 234 | (287) |
Liabilities | 2,930 | (1,823) | (900) | (4) | 0 | 2,297 | 3,790 | (1,290) |
Deferred income | (5) | (242) | 0 | 2 | 0 | 212 | 84 | (117) |
NOLs and tax credit carry forwards | 2,519 | 0 | 0 | 23 | 5 | (41) | 2,506 | 0 |
Deferred tax assets (liabilities) before offsetting | 13,263 | (6,647) | 316 | 69 | 5 | (456) | 12,840 | (6,290) |
Valuation allowances on deferred tax assets | (2,409) | 0 | 299 | (20) | 46 | 53 | (2,031) | 0 |
Set-off | (6,531) | 6,531 | 0 | 0 | 0 | 0 | (6,126) | 6,126 |
Net deferred tax assets (liabilities) | 4,323 | (116) | 615 | 49 | 51 | (403) | 4,683 | (164) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
Deferred income taxes as of 31\u00a0December 2021 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2021 | Other movements | Movement through income statement | 31 December 2021 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 186 | (489) | 0 | (71) | 0 | 72 | 249 | (551) |
Property, plant and equipment | 30 | (313) | 0 | 67 | 0 | (548) | 49 | (813) |
Investments and other long-term financial assets | 1,174 | (83) | 0 | 0 | 0 | 22 | 1,221 | (108) |
Inventories | 3,088 | (1,603) | 0 | 21 | 0 | 659 | 3,658 | (1,493) |
Receivables and other assets | 2,457 | (1,692) | (424) | 17 | 0 | (1,041) | 806 | (1,489) |
Prepaid expenses | 0 | (2) | 0 | 0 | 0 | 10 | 11 | (3) |
Provisions for retirement plans | 1,188 | 0 | (450) | 114 | 0 | 231 | 1,071 | 12 |
Other provisions | 2,043 | (330) | 0 | 55 | 0 | (1,151) | 754 | (137) |
Liabilities | 1,966 | (3,665) | 1,886 | (194) | 0 | 1,114 | 2,930 | (1,823) |
Deferred income | 53 | (117) | 0 | 16 | 0 | (199) | (5) | (242) |
NOLs and tax credit carry forwards | 2,283 | 0 | 0 | 50 | (24) | 210 | 2,519 | 0 |
Deferred tax assets (liabilities) before offsetting | 14,468 | (8,294) | 1,012 | 75 | (24) | (621) | 13,263 | (6,647) |
Valuation allowances on deferred tax assets | (2,602) | 0 | 55 | (37) | 59 | 116 | (2,409) | 0 |
Set-off | (7,843) | 7,843 | 0 | 0 | 0 | 0 | (6,531) | 6,531 |
Net deferred tax assets (liabilities) | 4,023 | (451) | 1,067 | 38 | 35 | (505) | 4,323 | (116) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
2022 | 2021 | |
|---|---|---|
Profit for the period attributable to equity owners of the parent (Net income) | \u20ac\u20094,247\u00a0million | \u20ac\u20094,213\u00a0million |
Weighted average number of ordinary shares | 787,080,579 | 785,326,074 |
Basic earnings per share | \u20ac\u20095.40 | \u20ac\u20095.36 |
Diluted earnings per share \u2013 The Company\u2019s dilutive potential ordinary shares are equity-settled Performance Shares relating to Long-Term Incentive Plans (\u201cLTIP\u201d).
In 2022, a total of 672,906 equity-settled Performance Shares was considered in the calculation of diluted earnings per share. LTIP 2022 plan has been excluded from the calculation because of its antidilutive effect.
2022 | 2021 | |
|---|---|---|
Profit for the period attributable to equity owners of the parent (Net income), adjusted for diluted calculation | \u20ac\u20094,247\u00a0million | \u20ac\u20094,213\u00a0million |
Weighted average number of ordinary shares (diluted) | 787,753,485 | 785,761,995 |
Diluted earnings per share | \u20ac\u20095.39 | \u20ac\u20095.36 |
Intangible assets comprise (i)\u00a0goodwill (see \u201c\u2013 Note\u00a08: Scope of Consolidation\u201d), (ii)\u00a0capitalised development costs (see \u201c\u2013 Note\u00a04: Significant Accounting Policies\u201d) and (iii)\u00a0other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
The Company has capitalised development costs in the amount of \u20ac\u20091,482\u00a0million as of 31\u00a0December 2022 (\u20ac\u20091,286\u00a0million as of 31\u00a0December 2021), for Airbus programmes (\u20ac\u2009785\u00a0million), Airbus Defence and Space (\u20ac\u2009372\u00a0million) and Airbus Helicopters (\u20ac\u2009325\u00a0million). The Company believes that its current portfolio of aircraft and helicopters, which represents a significant portion of its Capitalised Development Costs, could play a pivotal role in achieving near term targets set out by the Company and its customers\u2019 decarbonisation ambitions. This will be achieved by the replacement of less fuel efficient aircraft. The Company\u2019s commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% SAF by 2030 would further substantiate their useful life. Therefore, management estimates that there is no impact on the useful life of capitalised development costs resulting from the Company\u2019s journey towards sustainable aerospace.
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.
The Company tested the intangible assets for which an indicator of impairment was identified. In particular, the Company tested the intangible assets associated with some aircraft programmes and concluded that no impairment was necessary.
As of 31\u00a0December 2022 and 2021, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
(In \u20ac million) | Airbus | Airbus | Airbus Defence and Space | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Goodwill as of 31 December 2022 | 10,816 | 199 | 2,150 | 0 | 13,165 |
Goodwill as of 31 December 2021 | 10,731 | 139 | 2,158 | 0 | 13,028 |
The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2022 led to no impairment charge. The Company performed sensitivity tests in order to confirm that the recoverability of its long-lived assets was not impaired by climate change. No reasonably possible changes in the main assumptions used (including climate change) would cause the value in use of the goodwill to fall below its carrying value.
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:
Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
Property, plant and equipment as of 31\u00a0December 2022 and 2021 comprises the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross | Depreciation / Impairment | Net book | Gross | Depreciation / Impairment | Net book | |
Land, leasehold improvements and buildings, including buildings on land owned by others | 10,536 | (5,539) | 4,997 | 10,344 | (5,324) | 5,020 |
Technical equipment and machinery | 21,982 | (15,286) | 6,696 | 23,697 | (16,609) | 7,088 |
Other equipment, factory and office equipment\u00a0(1) | 3,932 | (3,107) | 825 | 3,853 | (3,013) | 840 |
Construction in progress | 2,241 | 0 | 2,241 | 1,890 | 0 | 1,890 |
Right-of-use assets\u00a0(2) | 2,578 | (832) | 1,746 | 2,486 | (788) | 1,698 |
Total | 41,269 | (24,764) | 16,505 | 42,270 | (25,734) | 16,536 |
(1) Includes the net book value of aircraft under operating lease (see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d). (2) The net book value of Land and Buildings under Right-of-use assets amounts to \u20ac\u20091,625\u00a0million. |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi- | Disposals | Depreciation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 5,020 | (20) | 21 | 4 | 227 | (21) | (234) | 4,997 |
Technical equipment and machinery | 7,088 | 10 | 310 | 2 | 942 | (44) | (1,612) | 6,696 |
Other equipment, factory and office equipment | 840 | 10 | 299 | 6 | 62 | (215) | (177) | 825 |
Construction in progress | 1,890 | (5) | 1,479 | 0 | (1,123) | 0 | 0 | 2,241 |
Right-of-use assets | 1,698 | 33 | 308 | 0 | (29) | (40) | (224) | 1,746 |
Total | 16,536 | 28 | 2,417 | 12 | 79 | (320) | (2,247) | 16,505 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Depreciation / Impairment (1) | Balance at |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 4,681 | 43 | 48 | 5 | 641 | (71) | (327) | 5,020 |
Technical equipment and machinery | 7,068 | 106 | 225 | 1 | 1,038 | (66) | (1,284) | 7,088 |
Other equipment, factory and office equipment | 811 | 14 | 150 | 2 | 66 | (7) | (196) | 840 |
Construction in progress | 2,310 | 16 | 1,289 | 2 | (1,678) | (49) | 0 | 1,890 |
Right-of-use assets | 1,804 | 59 | 240 | 0 | (96) | (49) | (260) | 1,698 |
Total | 16,674 | 238 | 1,952 | 10 | (29) | (242) | (2,067) | 16,536 |
(1) Accelerated depreciation previously included in onerous contract provision has been offset with the release of the provision in the presentation of the Consolidated Statement of Cash Flows for the year ended 2021. |
Property, plant and equipment decreased by \u20ac\u2009-31\u00a0million to \u20ac\u200916,505\u00a0million (2021: \u20ac\u200916,536\u00a0million). Property, plant and equipment include right-of-use assets for an amount of \u20ac\u20091,746\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,698\u00a0million).
Following the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 on 21\u00a0December 2022, the corresponding fixed assets were written-off for a total of \u20ac\u2009248\u00a0million and an impairment of \u20ac\u2009184\u00a0million has been recorded for the remaining Pl\u00e9iades Neo assets value partly offset by the insurance receivable of \u20ac\u2009200\u00a0million, all recognized as of 31\u00a0December 2022 in other income and other expenses (see \u201c\u2013 Note\u00a015: Other Income and Other Expenses\u201d).
Based on management\u2019s best estimate, there is no impact on the useful life of Property, plant and equipment, considering the Company\u2019s journey towards sustainable aerospace, climate risks and current amortisation schemes over asset life (see \u201c\u2013 Note 7: Climate Impacts\u201d).
For details on assets related to lease arrangements on sales financing, see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
France | 7,423 | 7,570 |
Germany | 4,124 | 4,185 |
UK | 1,433 | 1,604 |
Spain | 1,267 | 1,273 |
Other countries | 2,258 | 1,904 |
Total | 16,505 | 16,536 |
The Company leases mainly real estate assets, cars and equipment (such as land, warehouses, storage facilities and offices).
Short-term leases and leases of low-value assets refer mainly to IT equipment (e.g. printers, laptops and mobile phones) and other equipment.
The Company incurred interest expense on lease liabilities of \u20ac\u200931\u00a0million. The expense in relation to short-term and low-value assets is insignificant.
There are no significant variable lease payments included in the Company\u2019s lease arrangements.
The discount rate used to determine the right-of-use asset and the lease liability for each country and leased asset is calculated based on the incremental borrowing rate at inception of the lease. The Company calculated the rate applicable to each lease contract on the basis of the lease duration.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is shown in \u201cNote\u00a038.1 \u2013 Financial Risk Management\u201d.
The Company leases land and buildings mainly for its operational business warehouses including logistic facilities, offices, production halls and laboratories. The major leases are located in France, Germany, the US, Canada and China. As lease contracts are negotiated on an individual basis, lease terms contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3-25\u00a0years and may include extension, termination and other options, which provide operational flexibility to the Company.
The Company leases cars for management and other functions. Vehicle leases typically run for an average period of three years and do not provide renewal options.
The Company also leases IT equipment, machinery and other equipment that combined are insignificant to the total leased asset portfolio.
Commitments related to property, plant and equipment comprise contractual commitments for future capital expenditures and contractual commitments for purchases of \u201cLand, leasehold improvements and buildings including buildings on land owned by others\u201d (\u20ac\u20091,144\u00a0million as of 31\u00a0December 2022, 2021: \u20ac\u2009598\u00a0million).
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Other investments | 2,641 | 2,511 |
Other long-term financial assets | 1,549 | 1,490 |
Total non-current other investments and other long-term financial assets | 4,190 | 4,001 |
Current portion of other long-term financial assets | 665 | 537 |
Total | 4,855 | 4,538 |
Other investments mainly comprise the Company\u2019s participations and include the remaining investment in Dassault Aviation (9.90%, 2021: 9.90%) amounting to \u20ac\u20091,309\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u2009786\u00a0million). It is partly offset by the decrease in fair value of other investments.
Other long-term financial assets and the current portion of other long-term financial assets include other loans in the amount of \u20ac\u20092,129\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,909\u00a0million), and the sales financing activities in the form of finance lease receivables and loans from aircraft financing.
Contract assets represent the Company\u2019s right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned by something other than the passage of time (e.g. revenue recognised from the application of the PoC method before the Company has a right to invoice).
Contract liabilities represent the Company\u2019s obligation to transfer goods or services to a customer for which the Company has received consideration, or for which an amount of consideration is due from the customer (e.g. advance payments received).
Net contract assets and contract liabilities are determined for each contract separately. For serial contracts, contract liabilities are presented in current contract liabilities, if revenues are expected within the next twelve months or material expenses for the manufacturing process have already occurred. For long-term production contracts (e.g. governmental contracts such as A400M, Tiger, NH90), contract liabilities are classified as current when the relating inventories or receivables are expected to be recognised within the normal operating cycle of the long-term contract.
Trade receivables arise when the Company provides goods or services directly to a customer with no intention of trading the receivable. Trade receivables include claims arising from revenue recognition that are not yet settled by the debtor. Trade receivables are initially recognised at their transaction prices and are subsequently measured at amortised cost less any allowances for impairment. Gains and losses are recognised in the Consolidated Income Statement when the receivables are derecognised and impaired.
Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.
Significant changes in contract assets and contract liabilities during the period are as follows:
(In \u20ac million) | 2022 | 2021 | ||
|---|---|---|---|---|
Contract | Contract liabilities | Contract | Contract | |
Revenue recognised that was included in the contract liability\u00a0 | - | (23,494) | - | (19,311) |
Increases due to cash received, excluding amounts recognised as revenue\u00a0(1) | - | 26,797 | - | 17,792 |
Transfers from contract assets recognised at 1\u00a0January | (2,798) | - | (5,765) | - |
Increase as a result of changes in the measure of progress | 3,034 | - | 6,045 | - |
(1) Including final payments received from customers and others parties in anticipation. |
As of 31\u00a0December 2022, trade receivables amounting to \u20ac\u2009301\u00a0million (2021: \u20ac\u2009210\u00a0million) will mature after more than one year.
The respective movement in the allowance for expected credit losses in respect of trade receivables and contract assets during the period was as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Allowance balance at 1\u00a0January | (363) | (306) |
Utilisations / disposals and business combinations | 56 | 47 |
Additions | (73) | (104) |
Allowance balance at 31\u00a0December | (380) | (363) |
Trade liabilities of \u20ac\u200913,261\u00a0million (2021: \u20ac\u20099,693\u00a0million) increased by \u20ac +3,568\u00a0million, mainly driven by higher volume and payment terms increase linked to certain agreements reached with suppliers.
As of 31\u00a0December 2022, trade liabilities amounting to \u20ac\u200986\u00a0million (2021: \u20ac\u200989\u00a0million) will mature after more than one year.
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Write-down | Net book value | Gross amount | Write-down | Net book value | |
Raw materials and manufacturing supplies | 4,387 | (643) | 3,744 | 3,773 | (705) | 3,068 |
Work in progress | 20,484 | (1,229) | 19,255 | 19,553 | (2,010) | 17,542 |
Finished goods and parts for resale | 5,218 | (1,060) | 4,158 | 5,356 | (800) | 4,556 |
Advance payments to suppliers | 5,114 | (69) | 5,045 | 3,491 | (119) | 3,372 |
Total | 35,203 | (3,001) | 32,202 | 32,173 | (3,634) | 28,538 |
Inventories of \u20ac\u200932,202\u00a0million (2021: \u20ac\u200928,538\u00a0million) increased by \u20ac\u2009+3,664\u00a0million. This is driven by Airbus (\u20ac\u2009+3,825\u00a0million), mainly reflecting the inventory build up to support ramp up. It also includes higher advance payments made to suppliers.
In 2022, write-downs of inventories in the amount of \u20ac\u2009-394\u00a0million (2021: \u20ac\u2009-655\u00a0million) are recognised in cost of sales, whereas reversal of write-downs amounts to \u20ac\u2009243\u00a0million (2021: \u20ac\u2009459\u00a0million). At 31\u00a0December 2022, \u20ac\u200918,099\u00a0million of work in progress and \u20ac\u20094,015\u00a0million of finished goods and parts for resale were carried at net realisable value.
Inventories recognised as an expense during the period amount to \u20ac\u200935,710\u00a0million (2021: \u20ac\u200932,388\u00a0million).
Provisions \u2014 The determination of provisions, e.g. for onerous contracts, program-related provisions, warranty costs, restructuring measures and legal proceedings is based on best estimates.
In general, in the aerospace sector, the contractual and technical parameters considered for provision calculations are complex. Hence uncertainty exists with regard to the timing and amounts of expenses to be taken into account.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for pensions | 3,509 | 7,072 |
Other provisions | 7,514 | 8,209 |
Total | 11,023 | 15,281 |
thereof non-current portion | 6,896 | 10,771 |
thereof current portion | 4,127 | 4,510 |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
As a consequence of the increased discount rates a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
Other provisions\u00a0decreased mainly due to the decrease in provisions for onerous contracts due to the utilisation and net presentation of the A400M programme losses against inventories, the reduction in the A220 programme and the release of compliance-related provisions.
Movements in other provisions during the year were as follows:
(In \u20ac million) | Balance at | Exchange differences | Increase from passage | Additions | Reclassification/ Change in consolidated | Used | Released | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Onerous contracts | 2,249 | 56 | 0 | 300 | 211 | (945) | (63) | 1,808 |
Outstanding costs | 1,376 | 3 | 0 | 376 | 0 | (283) | (98) | 1,374 |
Aircraft financing risks\u00a0(1) | 17 | 1 | 0 | 0 | 0 | (11) | (2) | 5 |
Obligation from services and maintenance agreements | 491 | 1 | 8 | 11 | 0 | (53) | (74) | 384 |
Warranties | 372 | 5 | (3) | 99 | 12 | (53) | (35) | 397 |
Personnel-related provisions\u00a0(2) | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
Litigation and claims\u00a0(3) | 728 | 2 | 0 | 156 | (9) | (29) | (517) | 331 |
Asset retirement | 151 | 0 | 5 | 9 | 0 | 0 | (18) | 147 |
Other risks and charges | 2,056 | (4) | (6) | 812 | (8) | (395) | (130) | 2,325 |
Total | 8,209 | 65 | 6 | 2,184 | 181 | (2,133) | (998) | 7,514 |
(1) See \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d. (2) See \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d. (3) See \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. |
Provisions for onerous contracts in 2022 mainly include the utilisation and net presentation of the A400M programme losses against inventories and the reduction in the A220 programme.
Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d.
Provisions for litigation and claims decreased mainly due to the release of compliance-related provisions for an amount of \u20ac\u20090.3\u00a0billion.
Contingent assets and contingent liabilities \u2014 The Company is exposed to technical and commercial contingent obligations due to the nature of its businesses. To mitigate this exposure, the Company has subscribed a Global Aviation Insurance Programme (\u201cGAP\u201d). Information required under IAS\u00a037 \u201cProvisions, Contingent Assets and Contingent Liabilities\u201d is not disclosed if the Company concludes that disclosure can be expected to prejudice seriously its position in a dispute with other parties.
For other contingent liabilities, see \u201c\u2013 Note\u00a039: Litigation and Claims\u201d and \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d (mainly A400M programme).
Other commitments include contractual guarantees and performance bonds to certain customers as well as commitments for future capital expenditures and amounts which may be payable to commercial intermediaries if future sales materialise.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Positive fair values of derivative financial instruments\u00a0(1) | 753 | 664 |
Others | 28 | 27 |
Total non-current other financial assets | 781 | 691 |
Receivables from related companies | 1,104 | 803 |
Positive fair values of derivative financial instruments\u00a0(1) | 1,141 | 341 |
Others | 297 | 307 |
Total current other financial assets | 2,542 | 1,451 |
Total | 3,323 | 2,142 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Liabilities for derivative financial instruments\u00a0(1) | 6,163 | 2,640 |
European Governments\u2019 refundable advances\u00a0(2) | 3,717 | 3,730 |
Others | 237 | 192 |
Total non-current other financial liabilities | 10,117 | 6,562 |
Liabilities for derivative financial instruments\u00a0(1) | 3,450 | 1,923 |
European Governments\u2019 refundable advances\u00a0(2) | 140 | 131 |
Liabilities to related companies | 186 | 180 |
Others | 297 | 298 |
Total current other financial liabilities | 4,073 | 2,532 |
Total | 14,190 | 9,094 |
thereof other financial liabilities due within 1\u00a0year | 4,073 | 2,532 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. (2) Refundable advances from European Governments are provided to the Company to finance research and development activities for certain projects on a risk-sharing basis, i.e. they are repaid to the European Governments subject to the success of the project. |
The total net fair value of derivative financial instruments decreased by \u20ac -4,161\u00a0million to \u20ac\u2009-7,719\u00a0million (2021: \u20ac\u2009-3,558\u00a0million) as a result of the strengthened US dollar versus the euro associated with the mark to market valuation of the hedge portfolio.
In 2022, the European Governments\u2019 refundable advances decreased by \u20ac\u2009-4\u00a0million to \u20ac\u20093,857\u00a0million (2021: \u20ac\u20093,861\u00a0million).
The allocation of European Governments\u2019 refundable advances between non-current and current presented in the Consolidated Financial Statements ended 31\u00a0December 2022 is based on the applicable contractual repayment dates.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cost to fulfil a contract | 337 | 301 |
Prepaid expenses | 149 | 116 |
Others | 1,386 | 484\u00a0(1) |
Total non-current other assets | 1,872 | 901 |
Value added tax claims | 1,732 | 1,183 |
Cost to fulfil a contract | 448 | 499 |
Prepaid expenses | 161 | 392 |
Others | 509 | 319 |
Total current other assets | 2,850 | 2,393 |
Total | 4,722 | 3,294 |
(1) 2021 figures restated in accordance with 2022 presentation. |
As of 31\u00a0December 2022, non-current other assets include\u00a0\u20ac\u2009673\u00a0million of payments to be made to Airbus by suppliers after aircraft delivery (2021: \u20ac\u2009411\u00a0million). They are recorded as a reduction of cost of goods sold at the time of aircraft delivery. These future payments are discounted to reflect specific contractual terms and repayment profile.
As of 31\u00a0December 2022, a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK as a consequence of the increased discount rates (see \u201c\u2013 Note\u00a025: Provisions\u201d).
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Others | 498 | 583 |
Total non-current other liabilities | 498 | 583 |
Tax liabilities (excluding income tax) | 1,082 | 771 |
Others | 2,721 | 2,761 |
Total current other liabilities | 3,803 | 3,532 |
Total | 4,301 | 4,115 |
thereof other liabilities due within 1\u00a0year | 3,803 | 3,532 |
As of 31\u00a0December 2022, current other liabilities mainly comprise tax (excluding income tax) and personnel liabilities.
Sales financing \u2014 With a view to facilitating aircraft sales for Airbus and Airbus Helicopters, the Company may enter into either on-balance sheet or off-balance sheet sales financing transactions.
On-balance sheet transactions where the Company is lessor are classified as operating leases, finance leases and loans, inventories and to a minor extent, equity investments:
Off-balance sheet commitments \u2014 Financing commitments are provided to the customer either as backstop commitments before delivery, asset value guarantees at delivery or counter guarantees:
As of 31\u00a0December 2022, the nominal value of asset value guarantees considered as variable considerations under IFRS\u00a015 provided to beneficiaries amounts to \u20ac\u2009247\u00a0million (2021: \u20ac\u2009381\u00a0million), excluding \u20ac\u20099\u00a0million (2021: \u20ac\u20099\u00a0million) where the risk is considered to be remote. The present value of the risk inherent in asset value guarantees where a settlement is being considered probable is fully provided for and included in the total of contract liabilities for an amount of \u20ac\u2009236\u00a0million (2021: \u20ac\u2009345\u00a0million) (see \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
Exposure \u2014 In terms of risk management, the Company manages its gross exposure arising from its sales financing activities (\u201cGross Customer Financing Exposure\u201d) separately for (i)\u00a0customer\u2019s credit risk and (ii)\u00a0asset value risk.
Gross Customer Financing Exposure is the sum of (i)\u00a0the book value of operating leases before impairment, (ii)\u00a0the outstanding principal amount of finance leases or loans due before impairment, (iii)\u00a0the guaranteed amounts under financial guarantees (iv)\u00a0the book value of second hand aircraft for resale before impairment, and (v)\u00a0the outstanding value of any other investment in sales financing structured entities before impairment. This Gross Customer Financing Exposure may differ from the value of related assets on the Company\u2019s Statement of Financial Position and related off-balance sheet contingent commitments, mainly because (i)\u00a0assets are recorded in compliance with IFRS, but may relate to transactions that are financed on a limited recourse basis and (ii)\u00a0the carrying amount of the assets on the Consolidated Statement of Financial Position may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$\u202f0.4\u00a0billion (\u20ac\u20090.3\u2009billion) (2021: US$\u202f0.5\u00a0billion (\u20ac\u20090.4\u00a0billion)).
Net exposure is the difference between Gross Customer Financing Exposure and the collateral value. Collateral value is assessed using a dynamic model based on the net present value of expected future receivables, expected proceeds from resale and potential cost of default. This valuation model yields results that are typically lower than residual value estimates by independent sources in order to allow for what management believes is its conservative assessment of market conditions and for repossession and transformation costs. The net exposure is provided for by way of impairment losses and other provisions.
Impairment losses and provisions \u2014 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\u2019s carrying amount over the higher of the aircraft\u2019s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on\u00a0the 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 \u2014 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\u2019s 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\u00a0December 2022 the carrying amount of its loans from aircraft financing amounts to \u20ac\u200949\u00a0million (2021: \u20ac\u200977\u00a0million). This amount also represents the Company\u2019s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.
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\u00a0December 2022 and 31\u00a0December 2021 are as follows:
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2022 | 130 | 62 |
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2021 | 126 | 65 |
Direct customer financing cash flows amount to \u20ac\u2009-146\u00a0million in 2022 (2021: \u20ac\u200928\u00a0million).
The on-balance sheet assets relating to sales financing, the off-balance sheet commitments and the related financing exposure (not including asset value guarantees) as of 31\u00a0December 2022 and 2021 are as follows:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Airbus | Airbus Helicopters | Total | Airbus | Airbus Helicopters | Total | |
Operating leases\u00a0(1) | 102 | 0 | 102 | 105 | 13 | 118 |
Finance leases and loans | 101 | 31 | 132 | 145 | 19 | 164 |
Inventories | 37 | 0 | 37 | 11 | 0 | 11 |
Other investments | 66 | 0 | 66 | 62 | 0 | 62 |
On-balance sheet customer financing | 306 | 31 | 337 | 323 | 32 | 355 |
Off-balance sheet customer financing | 6 | 2 | 8 | 41 | 26 | 67 |
Gross Customer Financing Exposure | 312 | 33 | 345 | 364 | 58 | 422 |
Collateral values | (262) | (33) | (295) | (282) | (58) | (340) |
Net exposure | 50 | 0 | 50 | 82 | 0 | 82 |
Operating leases | 0 | 0 | 0 | (7) | 0 | (7) |
Finance leases and loans | (40) | 0 | (40) | (53) | 0 | (53) |
On-balance sheet commitments - inventories | (5) | 0 | (5) | (6) | 0 | (6) |
Off-balance sheet commitments - provisions\u00a0(2) | (5) | 0 | (5) | (16) | 0 | (16) |
Asset impairments, fair value adjustments\u00a0 | (50) | 0 | (50) | (82) | 0 | (82) |
(1) For 2022 and 2021, depreciation amounts to \u20ac\u200911\u00a0million and \u20ac\u20091\u00a0million respectively and related accumulated depreciation is \u20ac\u200914\u00a0million and \u20ac\u20098\u00a0million respectively. (2) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
Airbus | Airbus | Airbus Defence and Space | Consolidated Airbus | |
|---|---|---|---|---|
31\u00a0December 2022 | 79,134 | 20,803 | 34,330 | 134,267 |
31\u00a0December 2021 | 73,560 | 20,126 | 32,809 | 126,495 |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Wages, salaries and social contributions | 13,509 | 12,913 |
Net periodic pension cost\u00a0(1) | 136 | 356 |
Total | 13,645 | 13,269 |
(1) See \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d. |
In 2022, personnel expenses include\u00a0\u20ac\u20090.3\u00a0billion of\u00a0exceptional premiums granted to Airbus employees in the context of elevated inflation.
Several German companies provide life-time working account models, being employee benefit plans with a promised return on contributions or notional contributions that qualify as other long-term employee benefits under IAS\u00a019. The employees\u2019 periodical contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in other personnel charges.
(In \u20ac million) | Balance at | Exchange differences | Increase from passage of time | Additions | Reclassification / Change in consolidated group | Used | Released | Balance at 31\u00a0December |
|---|---|---|---|---|---|---|---|---|
Restructuring measures /\u00a0 | 125 | 2 | 0 | 34 | (6) | (55) | (9) | 91 |
Other personnel charges | 644 | (1) | 2 | 387 | (19) | (309) | (52) | 652 |
Total | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for retirement plans | 3,302 | 6,240 |
Provisions for deferred compensation | 207 | 832 |
Retirement plans and similar obligations | 3,509 | 7,072 |
In addition, as a consequence of the increased discount rates a non-current asset of \u20ac\u2009642\u00a0million has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.
The Defined Benefit Obligation (\u201cDBO\u201d) exposes the Company to actuarial risks, including mainly the following ones:
Market price risk \u2014 The return on plan assets is assumed to be the discount rate derived from AA-rated corporate bonds. If the actual return rate of plan assets is lower than the applied discount rate, the net liability increases accordingly. Moreover, the market values of the plan assets are subject to volatility, which also impacts the net liability.
Interest rate risk \u2014 The level of the DBO is significantly impacted by the applied discount rate. The low interest rates in recent years, particular in the euro-denominated market environment, lead to a relatively high net pension liability. If there is again a decline in returns of corporate bonds, the DBO will increase in future periods, which might only be offset partially by the positive development of market values of those corporate bonds included in plan assets. Generally, the pension obligation is sensitive to movements in the interest rate leading to volatile results in the valuation.
Inflation risk \u2014 The pension liabilities can be sensitive to movements in the inflation rate, whereby a higher inflation rate could lead to an increasing liability. Since some pension plans are directly related to salaries, increases in compensations could result in increasing pension obligations. For the deferred compensation plan P3, which is financed by the employees a fixed interest rate has been agreed.
Longevity risk \u2014 The pension liabilities are sensitive to the life expectancy of its members. Rising life expectancies lead to an increase in the valuation of the DBO.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.
The development of the provision for retirement and deferred compensation plans is set out below:
(In \u20ac million) | DBO | Plan assets | Total provisions | ||||
|---|---|---|---|---|---|---|---|
Pension plans of | Participation in | Total | Pension plans of | Participation in | Total | ||
Balance at 1 January 2021 | 18,778 | 4,370 | 23,148 | (9,896) | (3,272) | (13,168) | 9,980 |
Service cost (including past service cost) | 225 | 66 | 291 | 0 | 0 | 0 | 291 |
Interest cost and income | 118 | 61 | 179 | (69) | (45) | (114) | 65 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 48 | (6) | 42 | 0 | 0 | 0 | 42 |
changes in financial assumptions | (1,378) | (75) | (1,453) | 0 | 0 | 0 | (1,453) |
changes in experience adjustments | 95 | 44 | 139 | 0 | 0 | 0 | 139 |
plan assets | 0 | 0 | 0 | (954) | (387) | (1,341) | (1,341) |
Changes in consolidation, transfers and others | (12) | 0 | (12) | (14) | 0 | (14) | (26) |
Benefits paid | (455) | (167) | (622) | 156 | 167 | 323 | (299) |
Contributions by employer and other plan participants | 117 | 1 | 118 | (442) | (97) | (539) | (421) |
Foreign currency translation adjustments | 163 | 304 | 467 | (134) | (238) | (372) | 95 |
Balance at 31 December 2021 | 17,699 | 4,598 | 22,297 | (11,353) | (3,872) | (15,225) | 7,072 |
Service cost (including past service cost) | (25) | 72 | 47 | 0 | 0 | 0 | 47 |
Interest cost and income | 217 | 85 | 302 | (141) | (72) | (213) | 89 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 141 | (3) | 138 | 0 | 0 | 0 | 138 |
changes in financial assumptions | (5,246) | (2,056) | (7,302) | 0 | 0 | 0 | (7,302) |
changes in experience adjustments | 613 | 370 | 983 | 0 | 0 | 0 | 983 |
plan assets | 0 | 0 | 0 | 1,911 | 740 | 2,651 | 2,651 |
Changes in consolidation, transfers and others | (34) | 0 | (34) | 9 | 0 | 9 | (25) |
Benefits paid | (442) | (121) | (563) | 159 | 121 | 280 | (283) |
Contributions by employer and other plan participants | 80 | 1 | 81 | (348) | (254) | (602) | (521) |
Foreign currency translation adjustments | (67) | (178) | (245) | 80 | 183 | 263 | 18 |
Balance at 31 December 2022 | 12,936 | 2,768 | 15,704 | (9,683) | (3,154) | (12,837) | 2,867 |
The figures shown in the table include the surplus in two pension funds in the UK, resulting from a defined benefit obligation and assets of \u20ac\u20093,867\u00a0million and \u20ac\u20094,509\u00a0million that have been accounted as a non-current asset.
In the figures shown in the table, amounts of \u20ac\u20091,715\u00a0million and \u20ac\u20091,508\u00a0million are included for the defined benefit obligation and plan assets for deferred compensation plans in Germany (2021: \u20ac\u20092,503\u00a0million and \u20ac\u20091,682\u00a0million).
The past service cost included in the service cost amounts to \u20ac\u2009-400\u00a0million and \u20ac -228\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The employer contributions amount to \u20ac\u2009595\u00a0million and \u20ac\u20096\u00a0million for other plan participants as of 31\u00a0December 2022 (2021: \u20ac\u2009533\u00a0million and \u20ac\u20096\u00a0million respectively).
Additionally, the Company considers liabilities for lump sum payments (one-off payment or lump sum instalments) under the German P3 and APP pension arrangements in the total amount of \u20ac\u2009183\u00a0million and \u20ac\u2009172\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
The funding of the plans is as follows:
(In \u20ac million) | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
DBO | Plan assets | DBO | Plan assets | |
Unfunded pension plans | 873 | 0 | 1,406 | 0 |
Funded pension plans (partial) | 14,831 | (12,837) | 20,891 | (15,225) |
Total | 15,704 | (12,837) | 22,297 | (15,225) |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
In 2022, contributions for retirement and deferred compensation plans amount to \u20ac\u2009601\u00a0million. This mainly consists of:
Contributions of approximately \u20ac\u2009700\u00a0million are expected to be made in 2023.
The weighted average duration of the DBO for retirement plans and deferred compensation is 15\u00a0years at 31\u00a0December 2022 (31\u00a0December 2021: 18\u00a0years).
The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for the most significant plans is as follows:
Active | Deferred | Pensioner | |
|---|---|---|---|
Germany | 43% | 10% | 47% |
France | 99% | 0% | 1% |
UK | 63% | 16% | 21% |
Participation in BAE System Pension Scheme (Main Scheme) | 35% | 15% | 50% |
Canada | 82% | 2% | 16% |
The split of the present value of DBO for retirement plans and deferred compensation for the most significant plans is as follows:
Present value of DBO | Plan assets | |||
|---|---|---|---|---|
Retirement plans | Deferred Compensation plans | Retirement plans | Deferred Compensation plans | |
Germany | 83% | 17% | 81% | 19% |
France | 100% | 0% | 100% | 0% |
UK | 100% | 0% | 100% | 0% |
Participation in BAE System Pension Scheme (Main Scheme) | 100% | 0% | 100% | 0% |
Canada | 100% | 0% | 100% | 0% |
The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
(In \u20ac million) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Quoted prices | Unquoted prices | Total | Quoted prices | Unquoted prices | Total | |
Equity securities | ||||||
Europe | 565 | 0 | 565 | 1,539 | 0 | 1,539 |
Rest of the world | 128 | 0 | 128 | 408 | 0 | 408 |
Emerging markets | 417 | 0 | 417 | 561 | 0 | 561 |
Global | 1,959 | 898 | 2,857 | 2,896 | 693 | 3,589 |
Bonds | ||||||
Corporates | 2,502 | 1,114 | 3,616 | 3,125 | 283 | 3,408 |
Governments | 2,370 | 0 | 2,370 | 2,393 | 0 | 2,393 |
Pooled investments vehicles | 725 | 0 | 725 | 328 | 0 | 328 |
Commodities | 0 | 0 | 0 | 0 | 0 | 0 |
Hedge funds | 0 | 0 | 0 | 0 | 459 | 459 |
Derivatives | 0 | (278) | (278) | 0 | (71) | (71) |
Property | 0 | 767 | 767 | 0 | 723 | 723 |
Cash and money market funds | 202 | 144 | 346 | 344 | 263 | 607 |
Others | 0 | 1,324 | 1,324 | 0 | 1,281 | 1,281 |
Balance at 31 December | 8,868 | 3,969 | 12,837 | 11,594 | 3,631 | 15,225 |
The majority of funded plans apply broadly an asset-liability matching framework. The strategic asset allocation of the plans takes into account the characteristics of the underlying obligations. Investments are widely diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2022 consists of fixed income and equity instruments, although the Company also invests in property, commodities and hedge funds. The Company reassesses the characteristics of the pension obligations from time to time or as required by the applicable regulation or governance framework. This typically triggers a subsequent review of the strategic asset allocation.
The amount recorded as provision for retirement and deferred compensation plans can be allocated to the countries as follows:
(In \u20ac million) | Pension plans of the Company | Participation in BAE Systems Pension Scheme in the UK | Total | |||
|---|---|---|---|---|---|---|
Germany | France | UK | Canada | |||
DBO | 10,157 | 1,243 | 1,100 | 436 | 2,768 | 15,704 |
Plan assets | 7,957 | 19 | 1,356 | 351 | 3,154 | 12,837 |
Recognised at 31 December 2022 | 2,200 | 1,224 | (256) | 85 | (386) | 2,867 |
DBO | 13,330 | 1,941 | 1,858 | 570 | 4,598 | 22,297 |
Plan assets | 9,063 | 21 | 1,858 | 411 | 3,872 | 15,225 |
Recognised at 31 December 2021 | 4,267 | 1,920 | 0 | 159 | 726 | 7,072 |
Employer\u2019s contribution to state and private pension plans, mainly in Germany and France, are to be considered as defined contribution plans. Contributions in 2022 amounted to \u20ac\u2009894\u00a0million (2021: \u20ac\u2009859\u00a0million).
Share-based compensation \u2014 Since 2016, the Company operates a Performance Units and Performance Shares Plan. Performance Units qualify as a cash-settled share based payment plan under IFRS\u00a02 and Performance Shares qualify as anequity-settled share-based payment plan under IFRS\u00a02.
Since 2021, the Company operates only a Performance Shares Plan.
Plans granting Restricted Units, Performance Units and/or Performance Shares are also mentioned as \u201cLTIP\u201d in the following notes.
Since 2018, the Company operates also exceptional grants of Performance and Restricted Units as well as Performance and Restricted Shares under an Equity Pool. Such exceptional grants are validated by specific resolutions from the Board of Directors and qualify as cash-settled or equity-settled share-based payment plans under IFRS\u00a02. Accounting principles and methodology are the ones applied for LTIP as described below.
For cash-settled plans, provisions for associated services received are measured at fair value by multiplying the number of units expected to vest with the fair value of one LTIP unit at the end of each reporting period, taking into account the extent to which the employees have rendered service to date. Changes of the fair value are recognised as personnel expenses of the period, leading to a re-measurement of the provision. The fair value of Performance Units is re-measured at each closing date as far as they are not paid.
For equity-settled plans, compensation expense is measured at the grant date at the fair value by multiplying the number of shares expected to vest by the fair value of one LTIP share taking into account the extent to which the employees have rendered service to date. The compensation expense is accounting for over the vesting period of each LTIP equity-settled plans.
The fair value of each LTIP share (equity or cash-settled plans) is determined using a forward pricing model and is based on\u00a0publicly available risk free rate, volatility and dividend rate.
Besides the equity-settled plans described above, the Employee Share Ownership Plan(\u201cESOP\u201d) is an additional equity-settled share-based payment plan. Under this plan, the Company offers its employees Airbus\u00a0SE shares at fair value matched with a number of free shares based on a determining ratio. The fair value of shares provided is reflected as personnel expenses in the Company\u2019s Consolidated Income Statement with a corresponding increase in equity.
The Company hedges the share price risk inherent in the cash-settled LTIP units by entering into equity swaps where the reference price is based on the Airbus\u00a0SE share price. To the extent that cash-settled LTIP units are hedged, compensation expense recognised for these units will effectively reflect the reference price fixed under the equity swaps. In order to avoid any dilution of its current shareholders out of equity-settled LTIP units, the Company used to perform share buybacks to meet its obligations to its employees, following the decisions of the Board of Directors and approval of the Annual General Meeting (\u201cAGM\u201d).
In 2022, compensation expenses for LTIPs (incl. Equity Pool) including the effect of the equity swaps amounted to \u20ac\u200949\u00a0million (2021: \u20ac\u200936\u00a0million), among which \u20ac\u200921\u00a0million for cash-settled plans (2021: \u20ac\u200923\u00a0million) and \u20ac\u200928\u00a0million for equity-settled plans (2021: \u20ac\u200913\u00a0million).
As of 31\u00a0December 2022, provisions of \u20ac\u200957\u00a0million (2021: \u20ac\u200955\u00a0million) relating to LTIP units (cash-settled) have been accounted for.
The lifetime of the Performance Units as well as Performance Shares is contractually fixed (see the description of the respective tranche in the following table). For the units, the measurement is next to other market data, mainly affected by the share price as of the end of the reporting period (\u20ac\u2009111.02 as of 31\u00a0December 2022) and the lifetime of the units.
The fair value of units and shares granted in the frame of the LTIP 2022 plan is as follows:
Expected vesting date (In \u20ac per unit / share granted) | Fair value of Performance Shares |
|---|---|
May\u00a02026 - Performance Shares | 110.85 |
The principal characteristics of the LTIPs as at 31\u00a0December 2022 are summarised below:
LTIP 2017 (7) | LTIP 2018 (8) | LTIP 2019 (9) | LTIP 2020 | LTIP 2021 | LTIP 2022 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
Grant date (1) | 30 October 2017 | 30 October 2018 | 29 October 2019 | 28 October 2020 | 15 December 2021 | 14 December 2022 | ||||
Performance Units and Performance Shares Plan | ||||||||||
Units | Units | Shares | Units | Shares | Units | Shares | Units | Shares | Shares | Shares |
Number of units/shares\u00a0 | 421,638 | 425,702 | 278,376 | 281,181 | 247,508 | 247,508 | 420,004 | 420,004 | 520,870 | 649,373 |
Fair value at grant date (3) | 74.83 / 71.69 | 76.76 | 84.09 / 83.28 | 85.01 | 112.83 / 108.44 | 112.92 | 51.04 / 46.98 | 55.49 | 89.83 | 110.85 |
Fair Value of performance units as of 31 December\u00a0 | 0 | - | 108.79 | - | 108.77 / 105.94 | - | 108.77 / 105.94 | - | - | - |
Number of units/shares granted through Equity Pool (4) | 1,898 | 1,898 | 6,964 | 6,964 | 4,343 | 4,252 | 1,224 | 1,224 | 7,438 | 1,348 |
Number of units/ | 0 | 0 | 64,147 | 0 | 114,075 | 115,134 | 401,527 | 401,527 | 522,932 | 650,721 |
Total number of eligible beneficiaries | 1,601 | 1,626 | 1,576 | 1,602 | 1,782 | 1,574 | ||||
Vesting conditions | The Performance Units and Performance Shares will vest if the participant is still employed by a company of the Group at the respective vesting dates and upon achievement of mid-term business performance. Vesting schedule is made up of two payments over two years for units, one date of delivery for shares. | |||||||||
Limited Share price per unit at vesting dates to (6) | \u20ac\u2009147.62 | - | \u20ac\u2009213.88 | - | \u20ac\u2009244.12 | - | \u20ac\u2009136.08 | - | - | - |
Vesting dates | 50% each expected: in June 2021 in June 2022 | 100% expected in May 2021 | 50% each expected: in June 2022 in June 2023 | 100% expected in May 2022 | 50% each expected: in June 2023 in June 2024 | 100% expected in May 2023 | 50% each expected: in June 2024 in June 2025 | 100% expected in May 2024 | 100% expected in May 2025 | 100% expected in May 2026 |
Number of vested units/shares | 192,010 | 194,975 | 66,714 | 132,120 | 0 | 0 | 0 | 0 | 0 | 0 |
(1) Date, when the vesting conditions were determined. (2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of 150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of the Company) during the performance period, the Board of Directors can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition). (3) Values are provided for units corresponding per vesting date. (4) Mirroring the respective plan rules and regulations, but granted at a different date based on specific Board of Directors\u2019 resolutions. (5) Including shares granted through the Equity Pool, if applicable. (6) Corresponds to 200% of the respective reference share price. Overall, the pay-out for Performance Units is limited to a total amount of 250% of the units originally granted, each valued with the respective reference share price of \u20ac\u200973.81 (for LTIP 2017), \u20ac\u2009106.94 (for LTIP 2018), \u20ac\u2009122.06 (for LTIP 2019), \u20ac\u200968.04 (for LTIP 2020). (7) Based on performance achievement of 50% for Performance Units under LTIP 2017. (8) Based on performance achievement of 50% for Performance Units under LTIP 2018. (9) Based on performance achievement of 50% for Performance Units under LTIP 2019. |
Additionally, the Board of Directors approved in 2022 the exceptional grant of 1,836 Restricted Units and 47,035 Restricted Shares (2021: 1,354 Units and 10,725 Shares) under the Equity Pool with an average fair value of \u20ac\u2009102.64. 4,826 Units and 2,165 Shares have vested in 2022 (2021: 2,017 Units and 3,578 Shares). The number of units granted under the Equity Pool and outstanding as of 31\u00a0December 2022 is 1,836 Units and 56,857 Shares (2021: 6,086 Units and 13,247 Shares).
In 2022 and 2021, the Board of Directors approved a new ESOP scheme. Eligible employees were able to purchase a fixed number of previously unissued shares at fair market value (5, 10, 15, 30, 60 or 100\u00a0shares in 2022, 5, 15, 30, 50 or 100\u00a0shares in 2021). The Company matched each fixed number of shares with a number of the Company free shares based on a determined ratio (5, 9, 12, 20, 35 and 55 free shares, respectively in 2022, versus 4, 7, 10, 13 and 25 free shares, respectively in 2021). During a custody period of at least one year, employees are restricted from selling the shares, but have the right to receive all dividends paid. Employees who directly purchased the Airbus\u00a0SE shares have, in addition, the ability to vote at the Annual Shareholder Meetings. The subscription price was equal to the closing price at the Paris stock exchange on 16\u00a0March 2022 (2021: 17\u00a0February 2021) and amounted to \u20ac\u2009106.82 (2021: \u20ac\u200993.90). Investing through a mutual fund led to a price which corresponds to the average price at the Paris stock exchange during the 20 trading days immediately preceding 16\u00a0February 2022 (2021: 17\u00a0February 2021), resulting in a price of \u20ac\u2009114.01 (2021: \u20ac\u200989.52).
In 2022, the Company issued and sold 1,296,252 ordinary shares (2021: 1,442,645) with a nominal value of \u20ac\u20091.00 each.
In 2022, the Company issued and distributed 824,793 matching ordinary shares (2021: 491,775) with a nominal value of \u20ac\u20091.00 each. Compensation expense (excluding social security contributions) of \u20ac\u200982\u00a0million (2021: \u20ac\u200949\u00a0million) was recognised in connection with ESOP in 2022.
The Company\u2019s key management personnel consists of Members of the Executive Committee and Non-Executive Board Members. The Chief Executive Officer (\u201cCEO\u201d), who chairs the Executive Committee, is the sole Executive Board Member. The annual remuneration and related compensation costs of the key management personnel as expensed in the respective year can be summarised as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Executive Committee, including Executive Board Member | ||
Salaries and other short-term benefits (including bonuses) | 19.4 | 19.5 |
Post-employment benefit costs | 4.0 | 5.2 |
Share-based remuneration (\u201cLTIP award\u201d, including associated hedge result) | 4.1 | 3.4 |
Termination benefits\u00a0(1) | 0 | 6.1 |
Other benefits | 0.3 | 0.4 |
Social charges\u00a0(2) | 6.0 | 4.6 |
Non-Executive Board Members | ||
Short-term benefits (including social charges) | 2.3 | 2.0 |
Total expense recognised | 36.1 | 41.2 |
(1) 2021 Termination benefits include the termination benefits related to the year 2021. (2) Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. |
The amount of bonuses is based on estimated performance achievement as at the balance sheet date and difference between previous year estimation and actual pay-out in the current year. Outstanding short-term benefits (bonuses) at year-end 2022 for Executive Committee Members based on estimated performance achievement at year-end was \u20ac\u200910.2\u00a0million (2021: \u20ac\u200911.4\u00a0million).
In order to support the Company\u2019s target of reducing its Scope\u00a01 and 2 carbon emissions by 63% by 2030, the Board of Directors decided to translate this ambition into a concrete objective and include the CO2 reduction target in the collective variable remuneration of the CEO and all executives.
The post-employment and other long-term benefits defined obligation for the Executive Committee, including the CEO, amounted to \u20ac\u200916.7\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u200925.6\u00a0million). The disclosed post-employment and other long-term benefits reflect the total outstanding balance for all Executive Committee Members in charge at the end of the respective balance sheet date.
The share-based payment expenses result from not yet forfeited units and shares granted to the Executive Committee Members under the Company\u2019s LTIP which are re-measured at fair value according to the methodology described in Note\u00a033.
In 2022, the Members of the Executive Committee were granted 70,562 Performance Shares (2021: 66,575). For LTIP 2022, the respective fair value of these Shares at grant date was \u20ac\u20098.8\u00a0million (2021: \u20ac\u20096.5\u00a0million for both Performance Shares and Performance Units). As of 31\u00a0December 2022, provisions of \u20ac\u20095.4\u00a0million (2021: \u20ac\u20095.4\u00a0million) relating to LTIP have been recognised. The total number of outstanding Performance Units and Performance Shares granted to the current Members of the Executive Committee amounted to 81,183 and 206,211 respectively at 31\u00a0December 2022 (2021: 91,180 Performance Units and 152,967 Performance Shares).
The following benefits apply to Executive Committee Members, except the CEO.
In the case of contract termination, the Executive Committee Members are entitled to an indemnity equal to 1.5\u00a0times the Total Target Remuneration (defined as Base Salary and target Annual Variable Remuneration) with respect to applicable local legal requirements, if any.
This will not apply if the Executive Committee mandate is terminated for cause, in case of dismissal, if the Executive Committee Member resigns or has reached retirement age.
The Executive Committee Members\u2019 contract includes a non-compete clause which applies for a minimum of one year and can be extended at the Company\u2019s initiative for a further year. The Board of Directors has the discretion to waive or invoke the extension of the non-compete clause when legally or contractually possible. The compensation for each year that the non-compete clause applies is equal to 50% of the last Total Annual Remuneration (defined as Base Salary and Annual Variable Remuneration most recently paid) with respect to applicable local legal requirements, if any.
Past LTIP awards may be maintained in full or prorated, in such cases as in case of retirement or if a mandate is not renewed by the Company without cause, pro rata being based on the presence in the Company during performance periods. The vesting of past LTIP awards follows the plans\u2019 rules and regulations and is not accelerated in any case. LTIP awards are forfeited for Executives who leave the Company on their own initiative, but this is subject to review by the Board of Directors.
The termination benefits include assumptions about all effective, known or planned terminations to date.
Other benefits include expenses for Executive Committee Members\u2019 medical, death and disability coverage, company car and other usual facilities as applicable.
The annual remuneration and related compensation costs of the CEO as expensed in the respective year can be summarised as follows:
(In \u20ac) | 2022 | 2021 |
|---|---|---|
Base salary | 1,485,000 | 1,350,000 |
Annual variable pay | 2,008,800 | 22,247,750 |
Post-employment benefit costs | 1,385,222 | 1,138,794 |
Share-based remuneration (\u201cLTIP award\u201d)\u00a0(1) | 1,082,668 | 822,906 |
Termination benefits | 0 | 0 |
Other benefits | 32,734 | 32,479 |
Social charges\u00a0(2) | 1,357,922 | 1,089,385 |
(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment (see \u201c\u2013 Note\u00a033: Share-Based Payment\u201d). (2) Social charges depends on the applicable regulation to the CEO. In France, social charges comprise benefits accrued through mandatory collective and state plans such as pension, death and disability or medical coverage. |
The annual variable pay is based on estimated performance achievement as at the balance sheet date and difference between the previous year\u2019s estimation and actual pay-out in the current year.
Post-employment benefit costs relate to the aggregated amount of current service and interest costs for defined benefit plan and company cost for contributions base plans.
Following the Board decision approved in the AGM 2020, the CEO pension rights are accrued through a defined contributions plan from 1\u00a0January 2020, which coexists with the former defined benefit pension plan.
The accrued pension rights under the former defined benefit plan have been frozen at the end of 2019 and remain unvested until the retirement date of the CEO. The pension rights arising from the Company\u2019s defined contribution plan are deducted from the frozen defined pension rights.
As of 31\u00a0December 2022, the defined benefit obligation related to the frozen defined benefit commitment amounts to \u2009\u20ac\u20096,895,263 (2021: \u20ac\u20099,048,433). This obligation has been accrued in the 2022 Consolidated Financial Statements and will be updated annually up to the retirement date of the CEO considering additional service cost and future changes on economic assumptions or other factors like salary increase.
For the fiscal year 2022, the cost related to the CEO\u2019s pension rights accrued under Company\u2019s plans during the year represented an expense of \u20ac\u20091,385,222 (2021: \u20ac\u20091,138,794).
The annual cost of pension rights accrued under applicable mandatory collective and state pension plans are accounted for among social charges.
The table below gives an overview of the interests of the CEO, under the various LTIPs of the Company:
Granted Date | LTIP 2017 (1) | LTIP 2018 (1) | LTIP 2019 | LTIP 2020 | LTIP 2021 | LTIP 2022 |
|---|---|---|---|---|---|---|
Performance Units and Shares | 8,808 | 8,416 | 11,060 | 19,840 | 12,121 | 14,115 |
Revaluation | 50% | 50% | 50% | 100% | 100% | 100% |
Performance Units and Shares revalued | 4,404 | 4,208 | 5,531 | 19,840 | 12,121 | 14,115 |
Vested in 2022 | ||||||
in cash | 1,101 | 1,052 | 0 | 0 | 0 | 0 |
in shares | 0 | 2,104 | 0 | 0 | 0 | 0 |
Outstanding 2022 | ||||||
in cash | 0 | 1,052 | 2,766 | 9,920 | 0 | 0 |
in shares | 0 | 0 | 2,765 | 9,920 | 12,121 | 14,115 |
Vesting schedule | ||||||
Cash-settled units | For vesting dates, see \u201c\u2013 Note\u00a033.1: LTIP\u201d | |||||
Equity-settled units | May\u00a02021 | May\u00a02022 | May\u00a02023 | May\u00a02024 | May\u00a02025 | May\u00a02026 |
(1) 2017 and 2018 awards were granted before the appointment of the CEO and could vest during the CEO\u2019s mandate. |
Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
As of 31\u00a0December 2022, provisions of \u20ac\u20091,301,397 (2021: \u20ac\u20091,188,050) relating to Performance Units have been recognised. The pay-out from vested cash-settled LTIP in 2022 was \u20ac\u2009226,388 (2021: \u20ac\u2009324,504) excluding social charges.
The termination benefit applicable to the CEO is described in the Company\u2019s Remuneration policy.
As stipulated in the Company\u2019s Remuneration Policy, the benefits offered to the CEO are similar to the benefits granted to other executives of the Company and comprise, among other matters, medical, death and disability coverage (both through the French social security system and mandatory collective Company\u2019s plans), a company car and usual facilities. Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. The monetary value of other benefits provided to the CEO in 2022 amounted to \u20ac\u200932,734 (2021: \u20ac\u200932,479).
The Company has not provided any loans to, advances to and guarantees on behalf of the CEO.
The remuneration of the Non-Executive Members of the Board of Directors was as follows:
(In \u20ac) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Fixum\u00a0(1) | Attendance Fees\u00a0(2) | Total | Fixum (1) | Attendance Fees (2) | Total | |
Non-Executive Board Members | ||||||
Ren\u00e9 Obermann | 225,000 | 135,000 | 360,000 | 210,000 | 90,000 | 300,000 |
Victor Chu | 100,000 | 66,000 | 166,000 | 100,000 | 43,000 | 143,000 |
Jean-Pierre Clamadieu | 140,000 | 96,500 | 236,500 | 130,000 | 67,500 | 197,500 |
Ralph D. Crosby, Jr. | 100,000 | 100,000 | 200,000 | 100,000 | 61,000 | 161,000 |
Mark Dunkerley\u00a0(3) | 124,420 | 112,000 | 236,420 | 100,000 | 66,000 | 166,000 |
Stephan Gemkow | 110,000 | 98,000 | 208,000 | 100,000 | 63,000 | 163,000 |
Catherine Guillouard | 140,000 | 98,000 | 238,000 | 130,000 | 67,500 | 197,500 |
Amparo Moraleda | 140,000 | 103,000 | 243,000 | 130,000 | 54,500 | 184,500 |
Claudia Nemat | 100,000 | 76,500 | 176,500 | 100,000 | 56,500 | 156,500 |
Irene Rummelhoff\u00a0(4) | 72,100 | 75,000 | 147,100 | - | - | - |
Tony Wood\u00a0(5) | 3,913 | 10,000 | 13,913 | - | - | - |
Former Non-Executive Board Members | ||||||
Lord Drayson\u00a0(6) | 33,811 | 15,000 | 48,811 | 120,000 | 49,500 | 169,500 |
Carlos Tavares\u00a0(7) | 22,541 | 5,000 | 27,541 | 80,000 | 45,000 | 125,000 |
Total | 1,311,785 | 990,000 | 2,301,785 | 1,300,000 | 663,500 | 1,963,500 |
(1) Fixum includes a base fee for Board membership and the relevant Committee membership as the case may be (Audit Committee, Remuneration, Nomination and Governance Committee (\u201cRNGC\u201d), Ethics, Compliance and Sustainability Committee (\u201cECSC\u201d) and/or ad hoc Committee). The fixum for the year 2022 was paid 50% in January\u00a02022 and 50% in July\u00a02022 except in relation to the ad hoc Committee for which the full amount was paid in January\u00a02023. The fixum for the year 2021 was paid 50% in January\u00a02021 and 50% in July\u00a02021. (2) 2022 attendance fees include the Board attendance fees and the fees in relation to the relevant Committee (Audit Committee, RNGC and ECSC) meetings. The Board attendance fees related to the first se mester 2022 were paid in July\u00a02022, those related to the second semester 2022 were paid in January\u00a02023. The Commit tees\u2019 attendance fees related to full year 2022 were paid in January\u00a02023. (3) Member of the RNGC since 12\u00a0April 2022 (4) Member of the Board of Directors and the ECSC since 12\u00a0April 2022. (5) Member of the Board of Directors since 14\u00a0December 2022 (6) Member of the Board of Directors, the RNGC and the ECSC until 12\u00a0April 2022. (7) Member of the Board of Directors until 12\u00a0April 2022. |
The Company\u2019s shares are exclusively ordinary shares with a par value of \u20ac\u20091.00. The following table shows the development of the number of shares issued and fully paid:
(In number of shares) | 2022 | 2021 |
|---|---|---|
Issued at 1\u00a0January | 786,083,690 | 784,149,270 |
Issued for ESOP | 2,121,318 | 1,934,420 |
Issued at 31\u00a0December | 788,205,008 | 786,083,690 |
Treasury shares | (647,500) | (454,735) |
Outstanding at 31\u00a0December | 787,557,508 | 785,628,955 |
Holders of ordinary shares are entitled to dividends and to one vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including purchased treasury shares) amounts to \u20ac\u200912,950\u00a0million (2021: \u20ac\u20099,466\u00a0million) representing an increase of \u20ac\u2009+3,484\u00a0million. This is mainly due to the net income for the period of \u20ac\u2009+4,247\u00a0million and a change in actuarial gains and losses of \u20ac\u2009+3,432\u00a0million, partly offset by the mark to market revaluation of the hedge portfolio of \u20ac\u2009-2,240\u00a0million, the change in fair value of financial assets of \u20ac -1,091\u00a0million and a dividend payment of \u20ac -1,181\u00a0million (1.50\u00a0\u20ac per share).
Capital stock comprises the nominal amount of shares outstanding. The addition to capital stock represents the contribution for exercised options by employees of \u20ac\u20092,121,318 (2021: \u20ac\u20091,934,420) in compliance with the implemented ESOPs.
Share premium mainly results from contributions in kind in the course of the creation of the Company, cash contributions from the Company\u2019s initial public offering, capital increases and reductions due to the issuance and cancellation of shares.
Retained earnings include mainly the profit for the period and the changes in other comprehensive income from remeasurements of the defined benefit pension plans net of tax which amounts to \u20ac\u2009+3,432\u00a0million in 2022 (2021: +2,363\u00a0million).
On 12\u00a0April 2022, the Annual General Meeting (\u201cAGM\u201d) decided to distribute a gross amount of \u20ac\u20091.50 per share, which was paid on 21\u00a0April 2022. For the fiscal year 2022, the Company\u2019s Board of Directors proposes a cash distribution payment of \u20ac\u00a01.80 per share.
Treasury shares represent the amount paid or payable for own shares held in treasury. During 2022, the number of treasury stock held by the Company increased to 647,500 compared to 454,735 as of 31\u00a0December 2021, mainly due to the share buybacks partly offset by vested shares in 2022 under LTIP 2018 (see \u201c\u2013 Note\u00a033: Share-based Payment\u201d). No shares were sold back to the market nor cancelled (2021: 0\u00a0shares).
On 12\u00a0April 2022, the AGM of the Company authorised the Board of Directors, for a period expiring at the AGM to be held in 2023, to issue shares and to grant rights to subscribe for shares in the Company\u2019s share capital for the purpose of:
For each operation, such powers shall not extend to issuing shares or granting rights to subscribe for shares if there is no preferential subscription right and for an aggregate issue price in excess of \u20ac\u2009500\u00a0million per share issuance.
On 14\u00a0April 2021, the AGM authorised the Board of Directors for an 18-month period to repurchase up to 10% of the Company\u2019s issued share capital at a price per share not less than the nominal value and not more than the higher of the price of the last independent trade and the highest current independent bid on the trading venues of the regulated market of the country in which the purchase is carried out.
Furthermore, the AGM authorised the Board of Directors to determine on a case by case basis the share repurchase programmes to be implemented by the Company, if any.
The non-controlling interests (\u201cNCI\u201d) from non-wholly owned subsidiaries increased to \u20ac\u200932\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u200920\u00a0million). These NCI do not have a material interest in the Company\u2019s activities and cash flows.
The Company seeks to maintain a strong financial profile to safeguard its going concern, financial flexibility as well as shareholders\u2019, credit investors\u2019 and other stakeholders\u2019 confidence in the Company. Consequently, operating liquidity is of great importance.
As part of its capital management, it is one of the Company\u2019s objectives to maintain a strong credit rating by institutional rating agencies. This enables the Company to contain its cost of capital which positively impacts its stakeholder value (entity value). Next to other non-financial parameters, the credit rating is based on financial indicators such as cash flow, profitability, leverage ratios and liquidity ratios. The Company monitors these ratios to keep them in a range compatible with a strong rating.
Rating agency | Long-term rating | Outlook | Short-term rating |
|---|---|---|---|
Standard and Poor\u2019s | A | Stable | A-1 |
Moody\u2019s Investors Services | A2 | Stable | P1 |
Fitch Rating (unsolicited) | BBB+ | Stable | F1 |
The stand-alone rating reflects the Company\u2019s strong backlog providing revenue visibility, dominant market position in the single-aisle market, operating performance and overall its strong positioning to benefit from the recovery in air travel demand. It also reflects Airbus\u2019 exceptional liquidity, solid balance sheet as well as its prudent financial policy. Finally, it reflects the management\u2019s focus on programmes execution, profitability and cash generation improvement.
In accordance with the Company\u2019s conservative financial policy, a strong rating is key to maintain a wide array of funding sources at competitive conditions, to have broad access to long-term hedging and to strengthen the Company\u2019s position as a financially sound counterparty for its customers and suppliers.
Every year, the Company constructs a five-year plan used to assess its financial flexibility at current ratings and a value creation ambition. It is composed of (i)\u00a0EBIT and (ii)\u00a0Free Cash Flow, which is defined as Cash provided by operating activities and Cash used for investing activities less Change of securities, Contribution to plan assets for pensions, realised Treasury swaps and bank activities.
The Company uses the WACC to determine the Net Present Value (\u201cNPV\u201d), which is used for any investment decision.
The Company also monitors the level of dividends paid to its shareholders.
The Company generally satisfies its obligations arising from ESOPs and Share Incentive Plans (\u201cSIPs\u201d) by issuing new shares. In order to avoid any dilution of its current shareholders out of LTIPs, the Company performs share buybacks to meet its obligations to its employees, following the decisions of the Board of Directors and approval of the AGM. Apart from this purpose, the Company generally does not trade with treasury shares.
The Company complies with the capital requirements under applicable law and its Articles of Association.
The net cash position provides financial flexibility to fund the Company\u2019s operations, to react to business needs and risk profile and to return capital to the shareholders.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cash and cash equivalents | 15,823 | 14,572 |
Current securities | 1,762 | 1,317 |
Non-current securities | 6,013 | 6,794 |
Gross cash position | 23,598 | 22,683 |
Short-term financing liabilities | (2,142) | (1,946) |
Long-term financing liabilities | (10,631) | (13,094) |
Interest rate contracts\u00a0(1) | (1,394) | 97 |
Total | 9,431 | 7,740 |
(1) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance. |
The net cash position on 31\u00a0December 2022 amounted to \u20ac\u20099,431\u00a0million (2021: \u20ac\u20097,740\u00a0million), with a gross cash position of \u20ac\u200923,598\u00a0million (2021: \u20ac\u200922,683\u00a0million).
Derivative instruments recognised on the Company\u2019s Statement of Financial Position consist of (i)\u00a0instruments that are entered into as hedges of the Company\u2019s operating activities or interest result, and (ii)\u00a0embedded foreign currency derivatives that arise from separating the foreign currency component from certain operating contracts. Cash flows resulting from the settlement of these derivatives are therefore recorded as part of cash flow from operations. Similarly, financial assets and liabilities arising from customer financing activities and refundable advances from European Governments are considered part of operating activities and related cash flows are hence recognised as cash flows from operating activities.
Cash and cash equivalents are composed of the following elements:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bank account and petty cash | 3,687 | 1,964 |
Short-term securities (at fair value through profit or loss) | 11,135 | 12,075 |
Short-term securities (at fair value through OCI) | 1,001 | 533 |
Total cash and cash equivalents | 15,823 | 14,572 |
Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, are recognised in cash equivalents.
Cash and cash equivalents have increased by \u20ac +1.3\u00a0billion from \u20ac\u200914.6\u00a0billion at 31\u00a0December 2021 to \u20ac\u200915.8\u00a0billion at 31\u00a0December 2022. They include payments received in advance from certain customers and payments made to suppliers in anticipation.
The main variations are as follows:
Cash provided by operating activities amounts to \u20ac +6.3\u00a0billion in 2022, mainly driven by a profit translated into cash, a positive phasing impact from contracts assets and liabilities reflecting higher advance payments and a positive impact from net payments made to suppliers in anticipation. It also reflects an increase in trade liabilities driven by higher volume and payment terms increase linked to certain agreements reached with suppliers. It is partly offset by the increase in inventory.
Cash used for investing activities amounts to \u20ac -3.1\u00a0billion, mainly reflecting capital expenditures.\u00a0
Cash used for financing activities amounts to \u20ac -2.1\u00a0billion. It mainly includes the cash distribution to Airbus\u00a0SE shareholders of \u20ac -1.2\u00a0billion and the bond buyback of \u20ac -1.0\u00a0billion.
Similar to previous years, the Company has supported its suppliers concerning supply chain financing arrangements. As of 31\u00a0December 2022, these arrangements have no impact on the Company\u2019s Consolidated Financial Statements. The Company evaluates such suppliers\u2019 early payment arrangements against a number of indicators to assess whether the payable continues to hold the characteristics of a trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed customary payment terms in the industry. As at 31\u00a0December 2022, the payables subject to supplier financing arrangements do not meet the criteria to be reclassified as borrowings.
The majority of the Company\u2019s securities consists of debt securities and are classified at fair value through OCI (see \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d).
The Company\u2019s securities portfolio amounts to \u20ac\u20097,775\u00a0million and \u20ac\u20098,111\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The security portfolio contains a non-current portion of \u20ac\u20096,013\u00a0million (2021: \u20ac\u20096,794\u00a0million), and a current portion of \u20ac\u20091,762\u00a0million (2021: \u20ac\u20091,317\u00a0million).
Included in the securities portfolio as of 31\u00a0December 2022 and 2021, respectively, are corporate and government bonds bearing either fixed rate coupons (\u20ac\u20098,368\u00a0million nominal value; 2021: \u20ac\u20097,866\u00a0million) or floating rate coupons (\u20ac\u200932\u00a0million nominal value; 2021: \u20ac\u2009103\u00a0million), and foreign currency funds of fixed income funds (\u20ac\u20090\u00a0million fair value; 2021: \u20ac\u20092\u00a0million).
When the Company enters into securities lending or other financing activities that involve the pledging of securities as collateral, the securities pledged continue to be recognised on the balance sheet. As of 31\u00a0December 2022 and 2021, they were no securities pledged as collateral for borrowings from banks.
Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.
Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bonds and commercial papers | 8,681 | 11,061 |
Liabilities to financial institutions | 383 | 467 |
Loans | 75 | 75 |
Lease liabilities | 1,492 | 1,491 |
Total long term financing liabilities | 10,631 | 13,094 |
Bonds and commercial papers | 0 | 0 |
Liabilities to financial institutions | 27 | 26 |
Loans | 83 | 96 |
Lease liabilities | 242 | 245 |
Others\u00a0(1) | 1,790 | 1,579 |
Total short term financing liabilities | 2,142 | 1,946 |
Total | 12,773 | 15,040 |
(1) Included in \u201cothers\u201d are financing liabilities to joint ventures. |
Long-term financing liabilities, mainly comprising of bonds and lease liabilities,\u00a0decreased\u00a0by \u20ac\u00a0-2,463\u00a0million to \u20ac\u200910,631\u00a0million (2021: \u20ac\u200913,094\u00a0million), mainly due to the decrease in the value of bonds linked to higher interest rates and a \u20ac\u20091\u00a0billion bond buyback performed in June\u00a02022.
Short-term financing liabilities increased by \u20ac\u00a0+196\u00a0million to \u20ac\u20092,142\u00a0million (2021: \u20ac\u20091,946\u00a0million).
The Company has several euro-denominated bonds issued under its EMTN programme and two stand-alone US dollar-denominated bonds issued on the US institutional market under Rule 144A, outstanding as of 31\u00a0December 2022.
The Company can issue commercial papers under its \u20ac\u200911\u00a0billion Negotiable European Commercial Paper (\u201cNEuCP\u201d) programme, its \u20ac4\u00a0billion Euro Commercial Paper (\u201cECP\u201d) programme and its $ 3\u00a0billion US Commercial Paper programme.
As of\u00a031\u00a0December 2022, there were\u00a0no outstanding amounts\u00a0under\u00a0any of its commercial paper programmes.
The terms and repayment schedules of these bonds and loans are as follows:
Principal amount (In million) | Carrying amount (In \u20ac million) | Issuance | Coupon or interest | Effective interest | Maturity | Additional | ||
|---|---|---|---|---|---|---|---|---|
31 December | ||||||||
2022 | 2021 | |||||||
EMTN 15\u00a0years | \u20ac\u2009500 | 444 | 525 | Oct 2014 | 2.12% | 2.21% | Oct 2029 | Interest rate swapped into 3M Euribor +0.84% |
EMTN 10\u00a0years | \u20ac\u2009823 | 799 | 1,043 | Apr 2014 | 2.38% | 2.42% | Apr 2024 | Interest rate swapped into 3M Euribor +1.40% |
EMTN 10\u00a0years | \u20ac\u2009461 | 419 | 645 | May\u00a02016 | 0.88% | 0.98% | May\u00a02026 | Interest rate swapped into 3M Euribor +0.50% |
EMTN 15\u00a0years | \u20ac\u2009900 | 737 | 903 | May\u00a02016 | 1.38% | 1.50% | May\u00a02031 | Interest rate swapped into 3M Euribor +0.66% |
EMTN 5\u00a0years | \u20ac\u2009561 | 515 | 732 | Mar 2020 | 1.63% | 1.80% | April\u00a02025 | Interest rate swapped into 3M Euribor +2.01% |
EMTN 8\u00a0years | \u20ac\u2009611 | 512 | 725 | Mar 2020 | 2.00% | 2.10% | April\u00a02028 | Interest rate swapped into 3M Euribor +2.15% |
EMTN 12\u00a0years | \u20ac\u20091,000 | 754 | 957 | Mar\u00a02020 | 2.38% | 2.49% | April\u00a02032 | Interest rate swapped into 3M Euribor +2.24% |
EMTN 20\u00a0years | \u20ac\u20091,000 | 646 | 958 | June 2020 | 2.38% | 2.44% | June\u00a02040 | Interest rate swapped into 3M Euribor +1.93% |
EMTN 6\u00a0years | \u20ac\u2009894 | 792 | 1,215 | June\u00a02020 | 1.38% | 1.47% | June\u00a02026 | Interest rate swapped into 3M Euribor +1.66% |
EMTN 10\u00a0years | \u20ac\u20091,250 | 989 | 1,200 | June\u00a02020 | 1.63% | 1.74% | June\u00a02030 | Interest rate swapped into 3M Euribor +1.61% |
US$ Bond 10\u00a0years | US$ 750 | 653 | 694 | Apr 2017 | 3.15% | 3.20% | Apr 2027 | Interest rate swapped into 3M Libor +0.87% |
US$ Bond 30\u00a0years | US$ 750 | 643 | 731 | Apr 2017 | 3.95% | 4.02% | Apr 2047 | Interest rate swapped into 3M Libor +1.61% |
ACLP Private placement | US$ 830 | 778 | 733 | July\u00a02020,\u00a0 | 1.98% - 2.54% | 2.77% - 3.09% | July\u00a02026 to July\u00a02029 | |
Bonds | 8,681 | 11,061 | ||||||
Others | 410 | 493 | ||||||
Liabilities to financial institutions | 410 | 493 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2022 is as follows:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at\u00a0 | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 11,061 | (989) | 0 | 126 | (1,517) | 8,681 |
Liabilities to financial institutions | 493 | (83) | 0 | 0 | 0 | 410 |
Loans | 171 | (63) | 49 | 1 | 0 | 158 |
Finance lease liabilities | 1,736 | (262) | 0 | 32 | 228 | 1,734 |
Others | 1,579 | 220 | 0 | (9) | 0 | 1,790 |
Total | 15,040 | (1,177) | 49 | 150 | (1,289) | 12,773 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2021 is as follows\u00a0:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 13,107 | (1,903) | 0 | 168 | (311) | 11,061 |
Liabilities to financial institutions | 529 | (48) | 0 | 12 | 0 | 493 |
Loans | 188 | (23) | 0 | 6 | 0 | 171 |
Finance lease liabilities | 1,798 | (400) | 0 | 58 | 280 | 1,736 |
Others | 1,473 | 79 | 0 | 27 | 0 | 1,579 |
Total | 17,095 | (2,295) | 0 | 271 | (31) | 15,040 |
By the nature of its activities, the Company is exposed to a variety of financial risks: (i)\u00a0market risks, in particular foreign exchange risk, but also interest rate risk, equity price risk and commodity price risk, (ii)\u00a0liquidity risk and (iii)\u00a0credit risk. The Company\u2019s overall financial risk management activities focus on mitigating unpredictable financial market risks and their potential adverse effects on the Company\u2019s operational and financial performance.
The financial risk management of the Company is generally carried out by the Treasury department of the Company under policies approved by the Board of Directors or by the Chief Financial Officer. The identification, evaluation and hedging of the financial risks is in the joint responsibility of several established specific committees such as the Foreign Exchange Committee and the Asset Liability Management Committee, including the Company business segments.
The Company uses financial derivatives solely for risk mitigating purposes (\u201chedging\u201d) and applies hedge accounting for a significant portion of its hedging portfolio.
Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.
The Company\u2019s policy is to maintain sufficient cash and cash equivalents at any time to meet its present and future commitments as they fall due. It manages its liquidity by holding adequate volumes of liquid assets and maintains a committed revolving credit facility,\u00a0in addition to the cash inflow generated by its operating business. The Company continues to keep the focus on low counterparty risk within its asset portfolio. In addition, it maintains a set of other funding sources, and accordingly may raise loans from commercial banks and Development Finance Institutions and issue bonds, notes and commercial papers or enter into security lending agreements. Adverse changes in the capital markets could increase its funding costs and limit its financial flexibility.
In particular, Airbus signed on 5\u00a0July 2022 a \u20ac\u20098\u00a0billion Sustainability Linked Revolving Syndicated Credit Facility in order to refinance its \u20ac\u20096\u00a0billion existing facility signed in 2020.
Management considers the Company has sufficient resources to continue operating for at least 12\u00a0months and that there are no material uncertainties about the Company\u2019s ability to continue as a going concern.
Further, the management of the vast majority of the Company\u2019s liquidity exposure is centralised by a daily cash concentration process. This process enables it to manage its liquidity surplus as well as its liquidity requirements according to the actual needs of its subsidiaries. In addition, management monitors the Company\u2019s liquidity reserve as well as the expected cash flows from its operations.
The contractual maturities of the Company\u2019s financial liabilities, based on undiscounted cash flows and including interest payments, if applicable, are as follows:
(In \u20ac million) | Carrying amount | Contractual cash flows | < 1 year | 1 year - | 2 years - | 3 years - | 4 years - | > 5 years |
|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||
Non-derivative financial liabilities | (26,753) | (29,230) | (15,885) | (1,791) | (936) | (1,760) | (1,192) | (7,666) |
Derivative financial liabilities | (9,613) | (10,861) | (3,538) | (2,647) | (1,610) | (1,118) | (537) | (1,411) |
Total | (36,366) | (40,091) | (19,423) | (4,438) | (2,546) | (2,878) | (1,729) | (9,077) |
31\u00a0December 2021 | ||||||||
Non-derivative financial liabilities | (25,387) | (27,962) | (12,072) | (1,000) | (1,539) | (1,095) | (2,381) | (9,875) |
Derivative financial liabilities | (4,563) | (6,193) | (1,887) | (1,661) | (1,245) | (728) | (440) | (232) |
Total | (29,950) | (34,155) | (13,959) | (2,661) | (2,784) | (1,823) | (2,821) | (10,107) |
Non-derivative financial liabilities included in the table above comprise financing liabilities as presented in \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d. Due to their specific nature, namely their risk-sharing features and uncertainty about the repayment dates, the European Governments\u2019 refundable advances, which amount to \u20ac -3,857\u00a0million at 31\u00a0December 2022 (\u20ac\u2009-3,861\u00a0million at 31\u00a0December 2021) are not included.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is as follows:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | (241) | (245) |
Later than one year and not later than five years | (747) | (758) |
Later than five years | (1,036) | (1,043) |
Total undiscounted lease liabilities | (2,024) | (2,046) |
Lease liabilities included in the statement of financial position | (1,734) | (1,736) |
Current | (242) | (245) |
Non-current | (1,492) | (1,491) |
The Company is exposed to credit risk to the extent of non-performance by either its customers (e.g. airlines) or its counterparts with regard to financial instruments or issuers of financial instruments for gross cash investments. However, it has policies in place to avoid concentrations of credit risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk resulting from financial instruments is managed by the Company. In order to ensure sufficient diversification, a credit limit system is used.
The Company monitors the performance of the individual financial instruments and the impact of market developments on their performance and takes appropriate action on foreseeable adverse development based on pre-defined procedures and escalation levels.
Sales of products and services are made to customers after having conducted appropriate internal credit risk assessment. In order to support sales, primarily at Airbus, Airbus Helicopters and ATR, the Company may agree to participate in customer financing, on a case-by-case basis either directly or through guarantees provided to third parties. In determining the amount and terms of the financing transaction, the Company takes into account the airline\u2019s credit rating and economic factors reflecting the relevant financial market conditions, together with appropriate assumptions as to the anticipated future value of the financed asset.
The booked amount of financial assets represents the maximum credit exposure. The credit quality of financial assets can be assessed by reference to external credit rating (if available) or internal assessment of customers\u2019 creditworthiness e.g. airlines by way of internal risk pricing methods. For further information relating to gross credit risk and impairment see \u201c\u2013 Note\u00a038.7: Impairment Losses\u201d.
Financial instruments \u2014 The Company\u2019s financial assets mainly consist of cash, short to medium-term deposits and securities. Its financial liabilities include trade liabilities, obligations towards financial institutions, issued bonds and refundable advances from European Governments. All purchases and sales of financial assets are recognised on the settlement date according to market conventions.
Financial assets at amortised cost \u2014 This category comprises assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. It includes trade receivables.
Financial assets at fair value through OCI \u2014 This category comprises:
Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).
The Company assigns its financial instruments into classes based on their balance sheet category.
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2022:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | ||
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,474 | 1,166 | 0 | 0 | 2,640 | 2,640 |
Customer financing | 86 | 0 | 0 | 0 | 86 | 86 |
Other loans\u00a0(2) | 0 | 0 | 2,129 | 2,129 | 2,129 | 2,129 |
Trade receivables | 0 | 0 | 4,953 | 4,953 | 4,953 | 4,953 |
Contract assets | 0 | 0 | 1,527 | 1,527 | 1,527 | 1,527 |
Other financial assets | ||||||
Derivative instruments | 1,894 | 0 | 0 | 0 | 1,894 | 1,894 |
Non-derivative instruments | 0 | 0 | 1,429 | 1,429 | 1,429 | 1,429 |
Securities | 0 | 7,775 | 0 | 0 | 7,775 | 7,775 |
Cash and cash equivalents | 11,135 | 1,001 | 3,687 | 3,687 | 15,823 | 15,823 |
Total | 14,589 | 9,942 | 13,725 | 13,725 | 38,256 | 38,256 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (8,681) | (9,071) | (8,681) | (9,071) |
Liabilities to financial institutions and others | 0 | 0 | (2,358) | (2,358) | (2,358) | (2,358) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,734) | (1,734) | (1,734) | (1,734) |
Other financial liabilities | ||||||
Derivative instruments | (9,613) | 0 | 0 | 0 | (9,613) | (9,613) |
European Governments\u2019 refundable advances\u00a0(3) | 0 | 0 | (3,857) | (3,857) | (3,857) | (3,857) |
Others | 0 | (83) | (636) | (636) | (719) | (719) |
Trade liabilities | 0 | 0 | (13,261) | (13,261) | (13,261) | (13,261) |
Total | (9,613) | (83) | (30,527) | (30,917) | (40,223) | (40,613) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) The European Governments\u2019 refundable advances of \u20ac\u2009-3,857\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2021:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | Financial instruments total | |
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,033 | 1,478 | 0 | 0 | 2,511 | 2,511 |
Customer financing | 118 | 0 | 0 | 0 | 118 | 118 |
Other loans\u00a0(2) | 0 | 0 | 1,909 | 1,909 | 1,909 | 1,909 |
Trade receivables\u00a0(3) | 0 | 0 | 4,957 | 4,957 | 4,957 | 4,957 |
Contract assets | 0 | 0 | 1,404 | 1,404 | 1,404 | 1,404 |
Other financial assets | ||||||
Derivative instruments | 1,005 | 0 | 0 | 0 | 1,005 | 1,005 |
Non-derivative instruments | 0 | 0 | 1,137 | 1,137 | 1,137 | 1,137 |
Securities | 0 | 8,111 | 0 | 0 | 8,111 | 8,111 |
Cash and cash equivalents | 12,075 | 533 | 1,964 | 1,964 | 14,572 | 14,572 |
Total | 14,231 | 10,122 | 11,371 | 11,371 | 35,724 | 35,724 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (11,061) | (11,886) | (11,061) | (11,886) |
Liabilities to financial institutions and others | 0 | 0 | (2,243) | (2,243) | (2,243) | (2,243) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,736) | (1,736) | (1,736) | (1,736) |
Other financial liabilities | ||||||
Derivative instruments | (4,563) | 0 | 0 | 0 | (4,563) | (4,563) |
European Governments\u2019 refundable advances\u00a0(4) | 0 | 0 | (3,861) | (3,861) | (3,861) | (3,861) |
Others | 0 | (16) | (654) | (654) | (670) | (670) |
Trade liabilities | 0 | 0 | (9,693) | (9,693) | (9,693) | (9,693) |
Total | (4,563) | (16) | (29,248) | (30,073) | (33,827) | (34,652) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) 2021 figures restated in accordance with 2022 presentation. (4) The European Governments\u2019 refundable advances of \u20ac\u2009-3,861\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The fair values disclosed for financial instruments accounted for at amortised cost reflect Level\u00a02 input. Otherwise, the Company determines mostly fair values based on Level\u00a01 and Level\u00a02 inputs and to a lesser extent on Level\u00a03 input.
The following table presents the carrying amounts of the financial instruments held for the three levels of the fair value hierarchy as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | Level 1 | Level 2 | Level 3 | Total | |
Financial assets measured at fair value | ||||||||
\u00a0Equity Investments | 1,896 | 0 | 744 | 2,640 | 1,808 | 0 | 703 | 2,511 |
\u00a0Derivative instruments | 0 | 1,894 | 0 | 1,894 | 0 | 1,005 | 0 | 1,005 |
\u00a0Securities | 7,775 | 0 | 0 | 7,775 | 8,111 | 0 | 0 | 8,111 |
\u00a0Customer financing | 0 | 0 | 86 | 86 | 0 | 0 | 118 | 118 |
\u00a0Cash equivalents | 11,135 | 1,001 | 0 | 12,136 | 12,075 | 533 | 0 | 12,608 |
Total | 20,806 | 2,895 | 830 | 24,531 | 21,994 | 1,538 | 821 | 24,353 |
Financial liabilities measured at fair value | ||||||||
\u00a0Derivative instruments | 0 | (9,529) | (84) | (9,613) | 0 | (4,485) | (78) | (4,563) |
\u00a0Other financial liabilities | 0 | 0 | (83) | (83) | 0 | 0 | (16) | (16) |
Total | 0 | (9,529) | (167) | (9,696) | 0 | (4,485) | (94) | (4,579) |
The development of financial instruments of Level\u00a03 is as follows:
(In \u20ac million) | Derivatives | Participations | Customer financing | Total | Written put options on NCI interests | Commodity swap agreements | Total |
|---|---|---|---|---|---|---|---|
Balance at 1\u00a0January 2021 | 0 | 465 | 237 | 702 | 0 | (12) | (12) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (119) | (119) | 0 | (95) | (95) |
Equity | 0 | 238 | 0 | 238 | (16) | 0 | (16) |
Settlements | 0 | 0 | 0 | 0 | 0 | 29 | 29 |
Release | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2021 | 0 | 703 | 118 | 821 | (16) | (78) | (94) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (32) | (32) | 0 | (98) | (98) |
Equity | 0 | 41 | 0 | 41 | (67) | 0 | (67) |
Settlements | 0 | 0 | 0 | 0 | 0 | 92 | 92 |
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2022 | 0 | 744 | 86 | 830 | (83) | (84) | (167) |
As at 31\u00a0December 2022, the fair value of the written put options on non-controlling interests (\u201cNCI puts\u201d) relating to ACLP amounts to \u20ac\u200983\u00a0million (2021: \u20ac\u200916\u00a0million) and includes a funding of ACLP by IQ in 2022.
The fair value of these NCI puts is derived from a discounted cash flow analysis using the latest operating plan and a projection over the lifetime of the A220 programme. In addition, a post-tax WACC of 9.74% is used to discount the forecasted cash flows, taking into account the specificities of the programme (2021: 9.58%).
The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
The Company reports all its financial assets and financial liabilities on a gross basis. With each derivative counterparty there are master netting agreements in place providing for the immediate close-out of all outstanding derivative transactions and payment of the net termination amount in the event a party to the agreement defaults or another defined termination event occurs. Furthermore, securities lending transactions are accounted for as collateralised borrowings. As a result, the securities pledged as collateral continue to be recognised on the balance sheet and the amount of cash received at the outset of the transaction is separately recognised as a financial liability. The following tables set out, on a counterparty specific basis, the potential effect of master netting agreements and collateralised borrowings on the Company\u2019s Financial Position, separately for financial assets and financial liabilities that were subject to such agreements as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | Gross | Gross | Net amounts presented in the Financial Statements | Related amounts not set off | Net amount | |
|---|---|---|---|---|---|---|
Financial instruments | Cash | |||||
31\u00a0December 2022 | ||||||
Financial asset | 1,821 | 0 | 1,821 | (1,820) | 0 | 1 |
Financial liabilities | 9,449 | 0 | 9,449 | (1,820) | 0 | 7,629 |
31\u00a0December 2021 | ||||||
Financial asset | 802 | 0 | 802 | (788) | 0 | 14 |
Financial liabilities | 4,156 | 0 | 4,156 | (788) | 0 | 3,368 |
The contract or notional amounts of derivative financial instruments shown below do not necessarily represent amounts exchanged by the parties and, thus, are not necessarily a measure for the exposure of the Company through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, specified by year of expected maturity:
(In \u20ac million) | Remaining period | Total | |||||
|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | > 5 years | ||
31\u00a0December 2022 | |||||||
Net forward and swap contracts | 20,076 | 18,636 | 12,128 | 8,100 | 7,284 | 1,201 | 67,425 |
31\u00a0December 2021 | |||||||
Net forward sales contracts | 21,225 | 17,923 | 17,102 | 10,899 | 8,161 | 7,233 | 82,543 |
The following table sets out the notional amount of foreign exchange hedges in place as of 31\u00a0December 2022 relating to the commercial activities of Airbus, and the average euro converted rates applicable to corresponding EBIT.
(In $ million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 22,737 | 21,274 | 13,772 | 9,138 | 9,467 | 76,388 |
Forward rates | ||||||
\u20ac/US$ | 1.21 | 1.23 | 1.24 | 1.30 | 1.30 | 1.24 |
In 2022 new hedge contracts of US$ 7.5\u00a0billion (2021: US$ 29.5\u00a0billion) were added at an average rate of 1.12 US$/\u20ac\u2009 (2021: 1.21 US$/\u20ac).
As of 31\u00a0December 2022, the total hedge portfolio with maturities up to 2029 amounts to US$ 76.4\u00a0billion (2021: US$ 88.3\u00a0billion) and covers a major portion of the foreign exchange exposure expected over the hedging horizon. The average US$/\u20ac hedge rate of the US$/\u20ac hedge portfolio until 2029 amounts to 1.24 US$/\u20ac\u2009(2021: 1.25 US$/\u20ac).
(In \u00a3 million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 852 | 789 | 537 | 333 | 311 | 2,822 |
Forward rates | ||||||
\u20ac/\u00a3 | 0.88 | 0.89 | 0.90 | 0.91 | 0.93 | 0.89 |
Since 2021, \u20ac/\u00a3 hedges were implemented in order to cover the GBP exposure of the Company.
The notional amounts of interest rate contracts are as follows:
(In \u20ac million) | Remaining period | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | 6 years | 7 years | > 7 years | ||
31\u00a0December 2022 | |||||||||
Interest rate contracts | 0 | 823 | 561 | 1,355 | 1,406 | 611 | 500 | 4,150 | 9,406 |
31\u00a0December 2021 | |||||||||
Interest rate contracts | 12 | 0 | 1,000 | 750 | 1,850 | 1,324 | 750 | 4,650 | 10,336 |
Please also refer to \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d.
The notional amounts of commodity contracts are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 13 | 4 | 0 | 0 | 0 | 17 |
31\u00a0December 2021 | 20 | 21 | 3 | 0 | 0 | 44 |
The notional amounts of equity swaps are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 17 | 22 | 14 | 0 | 0 | 53 |
31\u00a0December 2021 | 18 | 17 | 18 | 10 | 0 | 63 |
The following table presents the reconciliation of AOCI, net of tax, resulting from cash flow hedge accounting as of 31\u00a0December 2022 and 31\u00a0December 2021:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Hedge reserve | ||
Opening balance | 3,448 | (262) |
Foreign exchange contracts | 5,575 | 5,279 |
Others | 34 | 12 |
Changes in fair values | 5,609 | 5,291 |
Foreign exchange contracts | (2,358) | (64) |
Others | (7) | (3) |
Amount reclassified to profit or loss (matured hedges) | (2,365) | (67) |
Foreign exchange contracts | (146) | (106) |
Others | (1) | 1 |
Amount classified to profit or loss (inefficiency) | (147) | (105) |
Tax impact | (857) | (1,409) |
Closing balance | 5,688 | 3,448 |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2022:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 1,492 | (7,643) | 4,429 | 1,146 | (146) | (2,358) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 0 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (60) | 36 | 0 | 0 | (7) |
Interest rate risk | 0 | 0 | 0 | 0 | 0 | 0 |
Commodity swap risk | 6 | 0 | (2) | 0 | (1) | 0 |
Equity swap risk | 1 | (4) | 0 | 0 | 0 | 0 |
Total | 1,499 | (7,707) | 4,463 | 1,146 | (147) | (2,365) |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2021:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 637 | (4,092) | 5,349 | (72) | (106) | (64) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 2 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (40) | 30 | 0 | 0 | (3) |
Interest rate risk | 0 | (1) | 0 | 0 | 0 | 0 |
Commodity swap risk | 7 | (3) | (12) | 0 | 1 | 0 |
Equity swap risk | 3 | (5) | (6) | 0 | 0 | 0 |
Total | 647 | (4,141) | 5,361 | (70) | (105) | (67) |
The Company\u2019s net gains or net losses recognised in profit or loss in 2022 and 2021, respectively, are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets or financial liabilities at fair value through profit or loss | ||
Held for trading | 497 | 404 |
Designated on initial recognition | 95 | 188 |
Financial assets at amortised cost | (232) | 283 |
Financial assets at fair value through OCI (previously available-for-sale) | 55 | 20 |
Financial liabilities measured at amortised cost | (75) | (700) |
Net losses of \u20ac\u2009-1,169\u00a0million (2021: \u20ac\u2009-218\u00a0million) are recognised directly in equity relating to financial assets at fair value.
Interest income from financial assets or financial liabilities through profit or loss is included in net gains or losses.
Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.
The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.
Investment grade instruments \u2014 The Company considers a significant increase in credit risk to have occurred, if there is a downgrade by four notches such that the instrument moves into a high yield bucket as a direct result of the downgrade. With respect to instruments that were high yield at initial recognition, a downgrade by four notches is considered as a significant increase in credit risk.
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2022 | 12.08 | 20.74 | 18.77 | 51.59 |
Change in financial assets | 3.82 | (5.44) | (1.47) | (3.09) |
Change in risk parameters | 1.32 | (6.95) | 9.41 | 3.78 |
At 31\u00a0December 2022 | 17.22 | 8.35 | 26.71 | 52.28 |
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | 8.09 | 18.26 | 23.42 | 49.77 |
Change in financial assets | 1.91 | (2.17) | (1.77) | (2.03) |
Change in risk parameters | 2.08 | 4.65 | (2.88) | 3.85 |
At 31\u00a0December 2021 | 12.08 | 20.74 | 18.77 | 51.59 |
The following table breaks down the gross carrying amount of loans and receivables as of 31\u00a0December 2022 and 2021, separately showing those that are impaired, renegotiated or past due:
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||||
Trade receivables | 3,727 | 0 | 376 | 373 | 147 | 132 | 99 | 479 | (380) | 4,953 |
Contract assets | 1,528 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1) | 1,527 |
Others | 2,552 | 2 | 93 | 131 | 391 | 116 | 7 | 452 | (188) | 3,556 |
Total | 7,807 | 2 | 469 | 504 | 538 | 248 | 106 | 931 | (569) | 10,036 |
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2021 | ||||||||||
Trade receivables\u00a0(1) | 3,686 | 3 | 356 | 485 | 124 | 207 | 64 | 393 | (361) | 4,957 |
Contract assets | 1,406 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (2) | 1,404 |
Others | 2,301 | 3 | 248 | 68 | 122 | 12 | 29 | 464 | (187) | 3,060 |
Total | 7,393 | 6 | 604 | 553 | 246 | 219 | 93 | 857 | (550) | 9,421 |
(1) 2021 figures restated in accordance with 2022 presentation. |
The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour and analysis of customer credit risk, including underlying customers\u2019 credit ratings if they are available.
The following impairment losses on financial assets are recognised in profit or loss in 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Trade receivables | (65) | (83) |
Contract assets | 0 | (1) |
Total | (65) | (84) |
Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.
With reference to Section\u00a02:382a (1) and (2) of the Netherlands Civil Code, the following fees for the financial year 2022 have been charged by EY to the Company, its subsidiaries and other consolidated entities:
(In \u20ac thousand) | 2022 | 2021 |
|---|---|---|
Audit of the Financial Statements | 11,975 | 10,265 |
Other audit engagements | 485 | 284 |
Tax services | 316 | 497 |
Other non-audit services | 793 | 257 |
Total | 13,569 | 11,303 |
Other audit firms have audit fees related to audit process, certification and examination of individual and consolidated accounts of \u20ac\u20097\u00a0million in 2022 (2021: \u20ac\u20095\u00a0million).
On 1\u00a0February 2023, Qatar Airways and Airbus announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party (see \u201c\u2013 Note\u00a039: Litigation and Claims\u201d). The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.\u00a0
The accompanying IFRS Consolidated Financial Statements present the financial position and the results of operations of\u00a0Airbus\u00a0SE\u00a0together with its subsidiaries referred to as \u201cthe Company\u201d,\u00a0European public limited-liability company (Societas Europaea)\u00a0with its seat (statutaire zetel) in Amsterdam,\u00a0The Netherlands, its registered address at\u00a0Mendelweg 30, 2333 CS Leiden,\u00a0The Netherlands, and registered with the Dutch Commercial Register (Handelsregister) under number\u00a024288945.\u00a0The Company\u2019s reportable segments are Airbus, Airbus Helicopters and Airbus Defence and Space\u00a0(see \u201c\u2013 Note\u00a012: Segment Information\u201d). The Company is listed on the European stock exchanges in Paris, Frankfurt am Main, Madrid, Barcelona, Valencia and Bilbao.\u00a0The IFRS Consolidated Financial Statements were authorised for issue by the Company\u2019s Board of Directors on 15\u00a0February 2023.
Russia\u2019s invasion of Ukraine on 24\u00a0February 2022 and the resulting export control restrictions and international sanctions against Russia, Belarus and certain Russian entities and individuals have resulted in disruption to the Company\u2019s business, its operations, data management and supply chain.
Following the imposition of export control restrictions and sanctions by the EU, the UK, the US and other countries that are relevant to the Company\u2019s business, the Company announced in March\u00a02022 it has suspended the delivery of aircraft and support services to Russian customers, as well as the supply of spare parts, equipment and software to Russia. The Company is complying with all applicable regulations and sanctions to its facilities and operations in Russia.
The crisis has increased the Company\u2019s exposure to supply chain disruption risk. Part of the titanium used by the Company is sourced from Russia, both directly and indirectly through the Company\u2019s suppliers. While geopolitical risks are integrated into the Company\u2019s titanium sourcing policies, the impact of Russia\u2019s invasion of Ukraine on the Company\u2019s ability to source materials and components and any future expansion of sanctions is continuously being reviewed.
The Company is also indirectly exposed through its partnership into the joint venture ArianeGroup. Arianespace paid and received pre-payments for the Soyuz program for which Roscosmos decided to suspend the rocket launches operated by Arianespace. Agreements have been reached on pre-payments received with two of these clients. Negotiations are well advanced with the remaining customers.
Due to the above mentioned export control restrictions and sanctions, the Company has been unable to deliver two aircraft previously recorded as sold at 31\u00a0December 2021. As a result, the associated revenues and margin have been derecognised as of 31\u00a0March 2022. These aircraft have been remarketed in the second quarter 2022.\u00a0
The Company\u2019s revenues in 2022 were not materially affected by the Ukraine crisis.
As of 31\u00a0December 2022, the resulting recorded EBIT charge amounts to approximately \u20ac\u20090.1\u00a0billion, mainly relating to Airbus.
In 2022, the Company has been operating in an adverse macroeconomic environment in light of high inflation, energy crisis, increasing interest rates, but also remaining effects of the COVID-19 pandemic.
During 2022, the Company experienced increases in its labour rates, due to wage increases but also through the distribution of exceptional premiums granted to employees to help them face inflation and the energy crisis. Furthermore, it also faced increases in raw material and energy costs. The main impacts of inflation on the Company\u2019s Consolidated Financial Statements have been assessed (see \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d). In particular, the Company concluded that the main material effect on the margin of its overtime contracts or on the provision for loss at completion of the onerous contracts recognised as of 31 December 2022 was related to its A400M contract.
Furthermore, the strengthened US dollar versus the euro had a negative impact on the mark to market valuation of the hedge portfolio, while higher interest rates led to a decrease in the bonds portfolio (for more details, see \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d and \u201c\u2013 Note\u00a026: Other Financial Assets and Other Financial Liabilities\u201d). The increase in interest rates also resulted in a decrease of the defined benefit obligations of the pension plans, only partly offset by a decline in pension plan assets (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d). Associated increases in discount rates did not result in any further long-term assets impairment charges (see \u201c\u2013 Note\u00a020: Intangible Assets\u201d).
In addition, COVID 19 continued to cause impacts on the Company\u2019s business especially related to its sales and operations in China.
This environment has further increased the Company\u2019s exposure to supply chain disruption, already impacted by the consequences of Russia\u2019s invasion of Ukraine (see \u201c\u2013 Note\u00a02: Ukraine Crisis\u201d). This supply chain disruption caused shortage or delay of materials and parts, hampering the Company\u2019s production ramp-up. On the A320 Family programme, the ramp-up trajectory has been adapted with suppliers. The 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 3 at the end of 2022 as planned and the Company now targets to reach rate 4 in 2024. The A350 monthly rate is now around 6 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 9 A350s at the end of 2025.\u00a0Basis of preparation \u2014 The Company\u2019s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d), issued by the International Accounting Standards Board (\u201cIASB\u201d) as endorsed by the European Union (\u201cEU\u201d) 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 (\u201c\u20ac\u201d) 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\u2019s content. The Company\u2019s accounting policies and methods are unchanged compared to 31\u00a0December 2021. The implementation of other amended standards has no material impact on the Company\u2019s Consolidated Financial Statements as of 31\u00a0December 2022. The most significant accounting policies are described below, and have been updated accordingly.Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.Provisions for onerous contracts \u2014 The Company records provisions for onerous contracts when it becomes probable that the total contract costs will exceed total contract revenue. Before a provision for onerous contracts is recorded, the related assets under construction are measured at their net realisable value and written-off if necessary. Onerous contracts are identified by monitoring the progress of the contract together with the underlying programme status. An estimate of the related contract costs is made, which requires significant and complex assumptions, judgements and estimates related to achieving certain performance standards (see \u201c\u2013 Note\u00a05: Key Estimates and Judgements\u201d, \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d and \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).Research and development expenses \u2014 The costs for internally generated research are expensed when incurred. The costs for internally generated development are capitalised when:Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).The accounting policies applied by the Company in preparation of its 2022\u00a0year-end Consolidated Financial Statements are the same as applied for the previous year. Other than that, amendments, improvements to and interpretations of standards effective from 1\u00a0January 2022 have no material impact on the Consolidated Financial Statements.
In April\u00a02021, IFRS\u00a0IC published an agenda decision, \u201cConfiguration or Customisation Costs in a Cloud Computing Arrangement\u201d, which considered how an entity should account for configuration and customisation costs incurred in implementing these service arrangements.
IFRS\u00a0IC concluded that these costs should be expensed, unless the criteria for recognising a separate asset are met. The Company did not perform significant configuration or customisation on its software-as-a-service contracts. As a consequence, the IFRS\u00a0IC decision has no significant impact on the Consolidated Financial Statements as of 31\u00a0December 2022.
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31\u00a0December 2022 and have not been applied in preparing these Consolidated Financial Statements and early adoption is not planned:
Standards and related amendments | IASB effective date | Endorsement |
|---|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Presentation of Financial Statements and IFRS Practice\u00a0 | 1\u00a0January 2023 | Endorsed |
Amendments to IAS 8:\u00a0 Definition of Accounting Estimates | 1 January 2023 | Endorsed |
Amendments to IAS\u00a012: Deferred Tax related to Assets and Liabilities arising from a Single Transaction | 1\u00a0January 2023 | Endorsed |
Amendments to IFRS\u00a017: Initial Application of IFRS\u00a017 and IFRS\u00a09 \u2013 Comparative Information | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Classification of Liabilities as Current or Non-current | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IAS\u00a01: Non-current Liabilities with Covenants | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IFRS\u00a016: Lease Liability in a Sale and Leaseback | 1\u00a0January 2024 | Not yet endorsed |
Climate change may have a major impact on both the Company\u2019s industrial operations and its upstream and downstream value chains, including aircraft direct operations and the wider air transport ecosystem. Accordingly, climate-related risks can potentially affect the Company\u2019s business and competitiveness, its customers and other actors in the aviation industry. For more details, please refer to the Risk Factors in the Report of the Board of Directors \u2013 4.6 Risk Factors \u2013 Climate-Related Risks.
As of 31\u00a0December 2022, to the best of the Company\u2019s judgment, there is no material impact on the Company\u2019s assets and liabilities. The Company considered the assumptions related to the life cycle of its programmes and the related impacts on long-lived assets \u00a0and concluded that there is no need for impairment.
Similarly, the Company did not identify any need for revision to the useful lives of the property, plant and equipment and intangible assets.
For more detailed information, see \u201c\u2013 Note\u00a020: Intangible assets\u201d and \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d.
This is supported by the current demand for the Company\u2019s products as demonstrated by its order backlog. As it relates to commercial aircraft, the Company\u2019s current portfolio already delivers significant CO2 reduction when compared to the previous generation aircraft. Around 75% of the global commercial aircraft fleet is made up of older generation aircraft, therefore, renewing the fleet represents an immediate potential for aviation decarbonisation. Furthermore, the Company expects its commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% Sustainable Aviation Fuels (SAF) by 2030 will play an important role in the sector\u2019s decarbonisation journey.
The Company has received approval from the Science Based Targets initiative (SBTi) for its greenhouse gas emission reduction near-term targets. These targets, in line with the Paris agreement\u2019s objectives, are based on climate science and cover the full set of the Company\u2019s emissions. Airbus intends to reduce its Scope 1 and Scope 2 industrial emissions by up to 63% by 2030, in line with a 1.5\u00b0C pathway. The Company also committed to reducing by 46% the greenhouse gas emissions intensity generated by its commercial aircraft in service (Scope 3\u00a0- Use of Sold Product) by 2035.
In support of the overall sector ambition, the Company is investing in and accelerating its efforts on complementary strategic pathways to reduce its environmental footprint. Overall, a major portion of the Company capital expenditures, research & technology, and research & development expenses is linked to its commercial aircraft activities and the realisation of five decarbonisation pathways (see Report of the Board of Directors \u2013 6.1.2 \u2013 Climate change). In 2022, the total research & development expenses amounted to \u20ac\u20093.1\u00a0billion (2021: \u20ac\u20092.7\u00a0billion).Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.The accompanying IFRS Consolidated Financial Statements present the financial position and the results of operations of\u00a0Airbus\u00a0SE\u00a0together with its subsidiaries referred to as \u201cthe Company\u201d,\u00a0European public limited-liability company (Societas Europaea)\u00a0with its seat (statutaire zetel) in Amsterdam,\u00a0The Netherlands, its registered address at\u00a0Mendelweg 30, 2333 CS Leiden,\u00a0The Netherlands, and registered with the Dutch Commercial Register (Handelsregister) under number\u00a024288945.\u00a0The Company\u2019s reportable segments are Airbus, Airbus Helicopters and Airbus Defence and Space\u00a0(see \u201c\u2013 Note\u00a012: Segment Information\u201d). The Company is listed on the European stock exchanges in Paris, Frankfurt am Main, Madrid, Barcelona, Valencia and Bilbao.\u00a0The IFRS Consolidated Financial Statements were authorised for issue by the Company\u2019s Board of Directors on 15\u00a0February 2023.
Russia\u2019s invasion of Ukraine on 24\u00a0February 2022 and the resulting export control restrictions and international sanctions against Russia, Belarus and certain Russian entities and individuals have resulted in disruption to the Company\u2019s business, its operations, data management and supply chain.
Following the imposition of export control restrictions and sanctions by the EU, the UK, the US and other countries that are relevant to the Company\u2019s business, the Company announced in March\u00a02022 it has suspended the delivery of aircraft and support services to Russian customers, as well as the supply of spare parts, equipment and software to Russia. The Company is complying with all applicable regulations and sanctions to its facilities and operations in Russia.
The crisis has increased the Company\u2019s exposure to supply chain disruption risk. Part of the titanium used by the Company is sourced from Russia, both directly and indirectly through the Company\u2019s suppliers. While geopolitical risks are integrated into the Company\u2019s titanium sourcing policies, the impact of Russia\u2019s invasion of Ukraine on the Company\u2019s ability to source materials and components and any future expansion of sanctions is continuously being reviewed.
The Company is also indirectly exposed through its partnership into the joint venture ArianeGroup. Arianespace paid and received pre-payments for the Soyuz program for which Roscosmos decided to suspend the rocket launches operated by Arianespace. Agreements have been reached on pre-payments received with two of these clients. Negotiations are well advanced with the remaining customers.
Due to the above mentioned export control restrictions and sanctions, the Company has been unable to deliver two aircraft previously recorded as sold at 31\u00a0December 2021. As a result, the associated revenues and margin have been derecognised as of 31\u00a0March 2022. These aircraft have been remarketed in the second quarter 2022.\u00a0
The Company\u2019s revenues in 2022 were not materially affected by the Ukraine crisis.
As of 31\u00a0December 2022, the resulting recorded EBIT charge amounts to approximately \u20ac\u20090.1\u00a0billion, mainly relating to Airbus.
In 2022, the Company has been operating in an adverse macroeconomic environment in light of high inflation, energy crisis, increasing interest rates, but also remaining effects of the COVID-19 pandemic.
During 2022, the Company experienced increases in its labour rates, due to wage increases but also through the distribution of exceptional premiums granted to employees to help them face inflation and the energy crisis. Furthermore, it also faced increases in raw material and energy costs. The main impacts of inflation on the Company\u2019s Consolidated Financial Statements have been assessed (see \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d). In particular, the Company concluded that the main material effect on the margin of its overtime contracts or on the provision for loss at completion of the onerous contracts recognised as of 31 December 2022 was related to its A400M contract.
Furthermore, the strengthened US dollar versus the euro had a negative impact on the mark to market valuation of the hedge portfolio, while higher interest rates led to a decrease in the bonds portfolio (for more details, see \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d and \u201c\u2013 Note\u00a026: Other Financial Assets and Other Financial Liabilities\u201d). The increase in interest rates also resulted in a decrease of the defined benefit obligations of the pension plans, only partly offset by a decline in pension plan assets (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d). Associated increases in discount rates did not result in any further long-term assets impairment charges (see \u201c\u2013 Note\u00a020: Intangible Assets\u201d).
In addition, COVID 19 continued to cause impacts on the Company\u2019s business especially related to its sales and operations in China.
This environment has further increased the Company\u2019s exposure to supply chain disruption, already impacted by the consequences of Russia\u2019s invasion of Ukraine (see \u201c\u2013 Note\u00a02: Ukraine Crisis\u201d). This supply chain disruption caused shortage or delay of materials and parts, hampering the Company\u2019s production ramp-up. On the A320 Family programme, the ramp-up trajectory has been adapted with suppliers. The 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 3 at the end of 2022 as planned and the Company now targets to reach rate 4 in 2024. The A350 monthly rate is now around 6 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 9 A350s at the end of 2025.\u00a0
Basis of preparation \u2014 The Company\u2019s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d), issued by the International Accounting Standards Board (\u201cIASB\u201d) as endorsed by the European Union (\u201cEU\u201d) 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 (\u201c\u20ac\u201d) 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\u2019s content. The Company\u2019s accounting policies and methods are unchanged compared to 31\u00a0December 2021. The implementation of other amended standards has no material impact on the Company\u2019s Consolidated Financial Statements as of 31\u00a0December 2022. The most significant accounting policies are described below, and have been updated accordingly.
Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.
Provisions for onerous contracts \u2014 The Company records provisions for onerous contracts when it becomes probable that the total contract costs will exceed total contract revenue. Before a provision for onerous contracts is recorded, the related assets under construction are measured at their net realisable value and written-off if necessary. Onerous contracts are identified by monitoring the progress of the contract together with the underlying programme status. An estimate of the related contract costs is made, which requires significant and complex assumptions, judgements and estimates related to achieving certain performance standards (see \u201c\u2013 Note\u00a05: Key Estimates and Judgements\u201d, \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d and \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
Research and development expenses \u2014 The costs for internally generated research are expensed when incurred. The costs for internally generated development are capitalised when:
Income tax credits granted for research and development activities are deducted from corresponding expenses or from capitalised amounts when earned.
Capitalised development costs, are recognised either as intangible assets or, when the related development activities lead to the construction of specialised tooling for production (\u201cjigs and tools\u201d), or involve the design, construction and testing of prototypes and models, as property, plant and equipment. Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, they are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales.
Inventories are measured at the lower of acquisition cost (generally the average cost) or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labour, and production related overheads (based on normal operating capacity and normal consumption of material, labour and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs to complete the sale.
Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated into functional currency at the foreign exchange rate in effect at the date of the transaction. Translation differences on non\u2011monetary financial assets and liabilities that are measured at fair value are reported as part of the fair value gain or loss. However, translation differences of non\u2011monetary financial assets measured at fair value and classified as fair value through other comprehensive income (\u201cOCI\u201d) are included in accumulated other comprehensive income (\u201cAOCI\u201d).
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.
The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:
Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.
Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.
The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).
Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.
Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).
Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).
Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).
Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.
Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.
The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).
Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
The accounting policies applied by the Company in preparation of its 2022\u00a0year-end Consolidated Financial Statements are the same as applied for the previous year. Other than that, amendments, improvements to and interpretations of standards effective from 1\u00a0January 2022 have no material impact on the Consolidated Financial Statements.
In April\u00a02021, IFRS\u00a0IC published an agenda decision, \u201cConfiguration or Customisation Costs in a Cloud Computing Arrangement\u201d, which considered how an entity should account for configuration and customisation costs incurred in implementing these service arrangements.
IFRS\u00a0IC concluded that these costs should be expensed, unless the criteria for recognising a separate asset are met. The Company did not perform significant configuration or customisation on its software-as-a-service contracts. As a consequence, the IFRS\u00a0IC decision has no significant impact on the Consolidated Financial Statements as of 31\u00a0December 2022.
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31\u00a0December 2022 and have not been applied in preparing these Consolidated Financial Statements and early adoption is not planned:
Standards and related amendments | IASB effective date | Endorsement |
|---|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Presentation of Financial Statements and IFRS Practice\u00a0 | 1\u00a0January 2023 | Endorsed |
Amendments to IAS 8:\u00a0 Definition of Accounting Estimates | 1 January 2023 | Endorsed |
Amendments to IAS\u00a012: Deferred Tax related to Assets and Liabilities arising from a Single Transaction | 1\u00a0January 2023 | Endorsed |
Amendments to IFRS\u00a017: Initial Application of IFRS\u00a017 and IFRS\u00a09 \u2013 Comparative Information | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Classification of Liabilities as Current or Non-current | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IAS\u00a01: Non-current Liabilities with Covenants | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IFRS\u00a016: Lease Liability in a Sale and Leaseback | 1\u00a0January 2024 | Not yet endorsed |
Climate change may have a major impact on both the Company\u2019s industrial operations and its upstream and downstream value chains, including aircraft direct operations and the wider air transport ecosystem. Accordingly, climate-related risks can potentially affect the Company\u2019s business and competitiveness, its customers and other actors in the aviation industry. For more details, please refer to the Risk Factors in the Report of the Board of Directors \u2013 4.6 Risk Factors \u2013 Climate-Related Risks.
As of 31\u00a0December 2022, to the best of the Company\u2019s judgment, there is no material impact on the Company\u2019s assets and liabilities. The Company considered the assumptions related to the life cycle of its programmes and the related impacts on long-lived assets \u00a0and concluded that there is no need for impairment.
Similarly, the Company did not identify any need for revision to the useful lives of the property, plant and equipment and intangible assets.
For more detailed information, see \u201c\u2013 Note\u00a020: Intangible assets\u201d and \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d.
This is supported by the current demand for the Company\u2019s products as demonstrated by its order backlog. As it relates to commercial aircraft, the Company\u2019s current portfolio already delivers significant CO2 reduction when compared to the previous generation aircraft. Around 75% of the global commercial aircraft fleet is made up of older generation aircraft, therefore, renewing the fleet represents an immediate potential for aviation decarbonisation. Furthermore, the Company expects its commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% Sustainable Aviation Fuels (SAF) by 2030 will play an important role in the sector\u2019s decarbonisation journey.
The Company has received approval from the Science Based Targets initiative (SBTi) for its greenhouse gas emission reduction near-term targets. These targets, in line with the Paris agreement\u2019s objectives, are based on climate science and cover the full set of the Company\u2019s emissions. Airbus intends to reduce its Scope 1 and Scope 2 industrial emissions by up to 63% by 2030, in line with a 1.5\u00b0C pathway. The Company also committed to reducing by 46% the greenhouse gas emissions intensity generated by its commercial aircraft in service (Scope 3\u00a0- Use of Sold Product) by 2035.
In support of the overall sector ambition, the Company is investing in and accelerating its efforts on complementary strategic pathways to reduce its environmental footprint. Overall, a major portion of the Company capital expenditures, research & technology, and research & development expenses is linked to its commercial aircraft activities and the realisation of five decarbonisation pathways (see Report of the Board of Directors \u2013 6.1.2 \u2013 Climate change). In 2022, the total research & development expenses amounted to \u20ac\u20093.1\u00a0billion (2021: \u20ac\u20092.7\u00a0billion).", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-3": { "value": "Airbus\u00a0SE", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-4": { "value": "European public limited-liability company (Societas Europaea)", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3299": { "value": "The Netherlands", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3300": { "value": "The Netherlands", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-5": { "value": "The Netherlands", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-6": { "value": "Mendelweg 30, 2333 CS Leiden,\u00a0The Netherlands", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-7": { "value": "The Company\u2019s reportable segments are Airbus, Airbus Helicopters and Airbus Defence and Space", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-8": { "value": "The IFRS Consolidated Financial Statements were authorised for issue by the Company\u2019s Board of Directors on 15\u00a0February 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-9": { "value": "Basis of preparation \u2014 The Company\u2019s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d), issued by the International Accounting Standards Board (\u201cIASB\u201d) as endorsed by the European Union (\u201cEU\u201d) 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 (\u201c\u20ac\u201d) 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\u2019s content. The Company\u2019s accounting policies and methods are unchanged compared to 31\u00a0December 2021. The implementation of other amended standards has no material impact on the Company\u2019s Consolidated Financial Statements as of 31\u00a0December 2022. The most significant accounting policies are described below, and have been updated accordingly.
Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.
Provisions for onerous contracts \u2014 The Company records provisions for onerous contracts when it becomes probable that the total contract costs will exceed total contract revenue. Before a provision for onerous contracts is recorded, the related assets under construction are measured at their net realisable value and written-off if necessary. Onerous contracts are identified by monitoring the progress of the contract together with the underlying programme status. An estimate of the related contract costs is made, which requires significant and complex assumptions, judgements and estimates related to achieving certain performance standards (see \u201c\u2013 Note\u00a05: Key Estimates and Judgements\u201d, \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d and \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
Research and development expenses \u2014 The costs for internally generated research are expensed when incurred. The costs for internally generated development are capitalised when:
Income tax credits granted for research and development activities are deducted from corresponding expenses or from capitalised amounts when earned.
Capitalised development costs, are recognised either as intangible assets or, when the related development activities lead to the construction of specialised tooling for production (\u201cjigs and tools\u201d), or involve the design, construction and testing of prototypes and models, as property, plant and equipment. Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, they are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales.
Inventories are measured at the lower of acquisition cost (generally the average cost) or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labour, and production related overheads (based on normal operating capacity and normal consumption of material, labour and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs to complete the sale.
Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated into functional currency at the foreign exchange rate in effect at the date of the transaction. Translation differences on non\u2011monetary financial assets and liabilities that are measured at fair value are reported as part of the fair value gain or loss. However, translation differences of non\u2011monetary financial assets measured at fair value and classified as fair value through other comprehensive income (\u201cOCI\u201d) are included in accumulated other comprehensive income (\u201cAOCI\u201d).
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Business combinations are accounted for using the acquisition method, as at the acquisition date, which is the date on which control is transferred to the Company.The determination of the fair value of the acquired assets and the assumed liabilities which are the basis for the measurement of goodwill requires key estimates. Land, buildings and equipment are usually independently appraised while marketable securities are valued at market prices. If intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company either consults with an independent external valuation expert or develops the fair value internally, using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows.
These evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied.Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.Financial instruments \u2014 The Company\u2019s financial assets mainly consist of cash, short to medium-term deposits and securities. Its financial liabilities include trade liabilities, obligations towards financial institutions, issued bonds and refundable advances from European Governments. All purchases and sales of financial assets are recognised on the settlement date according to market conventions.Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).The Company assigns its financial instruments into classes based on their balance sheet category.Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.Contract assets represent the Company\u2019s right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned by something other than the passage of time (e.g. revenue recognised from the application of the PoC method before the Company has a right to invoice).Contract liabilities represent the Company\u2019s obligation to transfer goods or services to a customer for which the Company has received consideration, or for which an amount of consideration is due from the customer (e.g. advance payments received).Net contract assets and contract liabilities are determined for each contract separately. For serial contracts, contract liabilities are presented in current contract liabilities, if revenues are expected within the next twelve months or material expenses for the manufacturing process have already occurred. For long-term production contracts (e.g. governmental contracts such as A400M, Tiger, NH90), contract liabilities are classified as current when the relating inventories or receivables are expected to be recognised within the normal operating cycle of the long-term contract.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-2": { "value": "Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.Revenue\u00a0increased by\u00a0\u20ac\u2009+6,614\u00a0million to \u20ac\u200958,763\u00a0million (2021: \u20ac\u200952,149\u00a0million). The increase is mainly driven by higher aircraft deliveries of 661 aircraft (in 2021: 611 aircraft) and higher contributions from Airbus Defence and Space and Airbus Helicopters. It also reflects a positive foreign exchange impact at Airbus.Revenue by geographical areas based on the location of the customer is as follows:\u00a0
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Europe | 24,261 | 19,490 |
Asia-Pacific | 15,380 | 15,970 |
North America | 13,549 | 10,546 |
Middle East | 2,598 | 2,256 |
Latin America | 2,086 | 980 |
Other countries | 889 | 2,907 |
Total | 58,763 | 52,149 |
Significant changes in contract assets and contract liabilities during the period are as follows:
(In \u20ac million) | 2022 | 2021 | ||
|---|---|---|---|---|
Contract | Contract liabilities | Contract | Contract | |
Revenue recognised that was included in the contract liability\u00a0 | - | (23,494) | - | (19,311) |
Increases due to cash received, excluding amounts recognised as revenue\u00a0(1) | - | 26,797 | - | 17,792 |
Transfers from contract assets recognised at 1\u00a0January | (2,798) | - | (5,765) | - |
Increase as a result of changes in the measure of progress | 3,034 | - | 6,045 | - |
(1) Including final payments received from customers and others parties in anticipation. |
As of 31\u00a0December 2022, trade receivables amounting to \u20ac\u2009301\u00a0million (2021: \u20ac\u2009210\u00a0million) will mature after more than one year.
The respective movement in the allowance for expected credit losses in respect of trade receivables and contract assets during the period was as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Allowance balance at 1\u00a0January | (363) | (306) |
Utilisations / disposals and business combinations | 56 | 47 |
Additions | (73) | (104) |
Allowance balance at 31\u00a0December | (380) | (363) |
Revenue recognition \u2014 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.
Incurred inefficiency cost such as the unexpected cost of materials, labour hours expended or other resources\u00a0consumed do not generate revenue as they do not contribute to the Company\u2019s progress in satisfying\u00a0the 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\u2019s 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 \u2014 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 (\u201cPoC\u201d method).
The Company transfers control over time when:
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\u00a015 from the sale of military transport aircraft, from the A400M launch contract and most of NH90 serial helicopters\u2019 contracts.Revenue\u00a0increased by\u00a0\u20ac\u2009+6,614\u00a0million to \u20ac\u200958,763\u00a0million (2021: \u20ac\u200952,149\u00a0million). The increase is mainly driven by higher aircraft deliveries of 661 aircraft (in 2021: 611 aircraft) and higher contributions from Airbus Defence and Space and Airbus Helicopters. It also reflects a positive foreign exchange impact at Airbus.Revenue by geographical areas based on the location of the customer is as follows:\u00a0
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Europe | 24,261 | 19,490 |
Asia-Pacific | 15,380 | 15,970 |
North America | 13,549 | 10,546 |
Middle East | 2,598 | 2,256 |
Latin America | 2,086 | 980 |
Other countries | 889 | 2,907 |
Total | 58,763 | 52,149 |
Significant changes in contract assets and contract liabilities during the period are as follows:
(In \u20ac million) | 2022 | 2021 | ||
|---|---|---|---|---|
Contract | Contract liabilities | Contract | Contract | |
Revenue recognised that was included in the contract liability\u00a0 | - | (23,494) | - | (19,311) |
Increases due to cash received, excluding amounts recognised as revenue\u00a0(1) | - | 26,797 | - | 17,792 |
Transfers from contract assets recognised at 1\u00a0January | (2,798) | - | (5,765) | - |
Increase as a result of changes in the measure of progress | 3,034 | - | 6,045 | - |
(1) Including final payments received from customers and others parties in anticipation. |
As of 31\u00a0December 2022, trade receivables amounting to \u20ac\u2009301\u00a0million (2021: \u20ac\u2009210\u00a0million) will mature after more than one year.
The respective movement in the allowance for expected credit losses in respect of trade receivables and contract assets during the period was as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Allowance balance at 1\u00a0January | (363) | (306) |
Utilisations / disposals and business combinations | 56 | 47 |
Additions | (73) | (104) |
Allowance balance at 31\u00a0December | (380) | (363) |
Provisions \u2014 The determination of provisions, e.g. for onerous contracts, program-related provisions, warranty costs, restructuring measures and legal proceedings is based on best estimates.
In general, in the aerospace sector, the contractual and technical parameters considered for provision calculations are complex. Hence uncertainty exists with regard to the timing and amounts of expenses to be taken into account.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for pensions | 3,509 | 7,072 |
Other provisions | 7,514 | 8,209 |
Total | 11,023 | 15,281 |
thereof non-current portion | 6,896 | 10,771 |
thereof current portion | 4,127 | 4,510 |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
As a consequence of the increased discount rates a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
Other provisions\u00a0decreased mainly due to the decrease in provisions for onerous contracts due to the utilisation and net presentation of the A400M programme losses against inventories, the reduction in the A220 programme and the release of compliance-related provisions.
Movements in other provisions during the year were as follows:
(In \u20ac million) | Balance at | Exchange differences | Increase from passage | Additions | Reclassification/ Change in consolidated | Used | Released | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Onerous contracts | 2,249 | 56 | 0 | 300 | 211 | (945) | (63) | 1,808 |
Outstanding costs | 1,376 | 3 | 0 | 376 | 0 | (283) | (98) | 1,374 |
Aircraft financing risks\u00a0(1) | 17 | 1 | 0 | 0 | 0 | (11) | (2) | 5 |
Obligation from services and maintenance agreements | 491 | 1 | 8 | 11 | 0 | (53) | (74) | 384 |
Warranties | 372 | 5 | (3) | 99 | 12 | (53) | (35) | 397 |
Personnel-related provisions\u00a0(2) | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
Litigation and claims\u00a0(3) | 728 | 2 | 0 | 156 | (9) | (29) | (517) | 331 |
Asset retirement | 151 | 0 | 5 | 9 | 0 | 0 | (18) | 147 |
Other risks and charges | 2,056 | (4) | (6) | 812 | (8) | (395) | (130) | 2,325 |
Total | 8,209 | 65 | 6 | 2,184 | 181 | (2,133) | (998) | 7,514 |
(1) See \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d. (2) See \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d. (3) See \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. |
Provisions for onerous contracts in 2022 mainly include the utilisation and net presentation of the A400M programme losses against inventories and the reduction in the A220 programme.
Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d.
Provisions for litigation and claims decreased mainly due to the release of compliance-related provisions for an amount of \u20ac\u20090.3\u00a0billion.
Contingent assets and contingent liabilities \u2014 The Company is exposed to technical and commercial contingent obligations due to the nature of its businesses. To mitigate this exposure, the Company has subscribed a Global Aviation Insurance Programme (\u201cGAP\u201d). Information required under IAS\u00a037 \u201cProvisions, Contingent Assets and Contingent Liabilities\u201d is not disclosed if the Company concludes that disclosure can be expected to prejudice seriously its position in a dispute with other parties.
For other contingent liabilities, see \u201c\u2013 Note\u00a039: Litigation and Claims\u201d and \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d (mainly A400M programme).
Other commitments include contractual guarantees and performance bonds to certain customers as well as commitments for future capital expenditures and amounts which may be payable to commercial intermediaries if future sales materialise.Several German companies provide life-time working account models, being employee benefit plans with a promised return on contributions or notional contributions that qualify as other long-term employee benefits under IAS\u00a019. The employees\u2019 periodical contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in other personnel charges.
(In \u20ac million) | Balance at | Exchange differences | Increase from passage of time | Additions | Reclassification / Change in consolidated group | Used | Released | Balance at 31\u00a0December |
|---|---|---|---|---|---|---|---|---|
Restructuring measures /\u00a0 | 125 | 2 | 0 | 34 | (6) | (55) | (9) | 91 |
Other personnel charges | 644 | (1) | 2 | 387 | (19) | (309) | (52) | 652 |
Total | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for retirement plans | 3,302 | 6,240 |
Provisions for deferred compensation | 207 | 832 |
Retirement plans and similar obligations | 3,509 | 7,072 |
In addition, as a consequence of the increased discount rates a non-current asset of \u20ac\u2009642\u00a0million has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.
The Defined Benefit Obligation (\u201cDBO\u201d) exposes the Company to actuarial risks, including mainly the following ones:
Market price risk \u2014 The return on plan assets is assumed to be the discount rate derived from AA-rated corporate bonds. If the actual return rate of plan assets is lower than the applied discount rate, the net liability increases accordingly. Moreover, the market values of the plan assets are subject to volatility, which also impacts the net liability.
Interest rate risk \u2014 The level of the DBO is significantly impacted by the applied discount rate. The low interest rates in recent years, particular in the euro-denominated market environment, lead to a relatively high net pension liability. If there is again a decline in returns of corporate bonds, the DBO will increase in future periods, which might only be offset partially by the positive development of market values of those corporate bonds included in plan assets. Generally, the pension obligation is sensitive to movements in the interest rate leading to volatile results in the valuation.
Inflation risk \u2014 The pension liabilities can be sensitive to movements in the inflation rate, whereby a higher inflation rate could lead to an increasing liability. Since some pension plans are directly related to salaries, increases in compensations could result in increasing pension obligations. For the deferred compensation plan P3, which is financed by the employees a fixed interest rate has been agreed.
Longevity risk \u2014 The pension liabilities are sensitive to the life expectancy of its members. Rising life expectancies lead to an increase in the valuation of the DBO.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.
The development of the provision for retirement and deferred compensation plans is set out below:
(In \u20ac million) | DBO | Plan assets | Total provisions | ||||
|---|---|---|---|---|---|---|---|
Pension plans of | Participation in | Total | Pension plans of | Participation in | Total | ||
Balance at 1 January 2021 | 18,778 | 4,370 | 23,148 | (9,896) | (3,272) | (13,168) | 9,980 |
Service cost (including past service cost) | 225 | 66 | 291 | 0 | 0 | 0 | 291 |
Interest cost and income | 118 | 61 | 179 | (69) | (45) | (114) | 65 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 48 | (6) | 42 | 0 | 0 | 0 | 42 |
changes in financial assumptions | (1,378) | (75) | (1,453) | 0 | 0 | 0 | (1,453) |
changes in experience adjustments | 95 | 44 | 139 | 0 | 0 | 0 | 139 |
plan assets | 0 | 0 | 0 | (954) | (387) | (1,341) | (1,341) |
Changes in consolidation, transfers and others | (12) | 0 | (12) | (14) | 0 | (14) | (26) |
Benefits paid | (455) | (167) | (622) | 156 | 167 | 323 | (299) |
Contributions by employer and other plan participants | 117 | 1 | 118 | (442) | (97) | (539) | (421) |
Foreign currency translation adjustments | 163 | 304 | 467 | (134) | (238) | (372) | 95 |
Balance at 31 December 2021 | 17,699 | 4,598 | 22,297 | (11,353) | (3,872) | (15,225) | 7,072 |
Service cost (including past service cost) | (25) | 72 | 47 | 0 | 0 | 0 | 47 |
Interest cost and income | 217 | 85 | 302 | (141) | (72) | (213) | 89 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 141 | (3) | 138 | 0 | 0 | 0 | 138 |
changes in financial assumptions | (5,246) | (2,056) | (7,302) | 0 | 0 | 0 | (7,302) |
changes in experience adjustments | 613 | 370 | 983 | 0 | 0 | 0 | 983 |
plan assets | 0 | 0 | 0 | 1,911 | 740 | 2,651 | 2,651 |
Changes in consolidation, transfers and others | (34) | 0 | (34) | 9 | 0 | 9 | (25) |
Benefits paid | (442) | (121) | (563) | 159 | 121 | 280 | (283) |
Contributions by employer and other plan participants | 80 | 1 | 81 | (348) | (254) | (602) | (521) |
Foreign currency translation adjustments | (67) | (178) | (245) | 80 | 183 | 263 | 18 |
Balance at 31 December 2022 | 12,936 | 2,768 | 15,704 | (9,683) | (3,154) | (12,837) | 2,867 |
The figures shown in the table include the surplus in two pension funds in the UK, resulting from a defined benefit obligation and assets of \u20ac\u20093,867\u00a0million and \u20ac\u20094,509\u00a0million that have been accounted as a non-current asset.
In the figures shown in the table, amounts of \u20ac\u20091,715\u00a0million and \u20ac\u20091,508\u00a0million are included for the defined benefit obligation and plan assets for deferred compensation plans in Germany (2021: \u20ac\u20092,503\u00a0million and \u20ac\u20091,682\u00a0million).
The past service cost included in the service cost amounts to \u20ac\u2009-400\u00a0million and \u20ac -228\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The employer contributions amount to \u20ac\u2009595\u00a0million and \u20ac\u20096\u00a0million for other plan participants as of 31\u00a0December 2022 (2021: \u20ac\u2009533\u00a0million and \u20ac\u20096\u00a0million respectively).
Additionally, the Company considers liabilities for lump sum payments (one-off payment or lump sum instalments) under the German P3 and APP pension arrangements in the total amount of \u20ac\u2009183\u00a0million and \u20ac\u2009172\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
The funding of the plans is as follows:
(In \u20ac million) | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
DBO | Plan assets | DBO | Plan assets | |
Unfunded pension plans | 873 | 0 | 1,406 | 0 |
Funded pension plans (partial) | 14,831 | (12,837) | 20,891 | (15,225) |
Total | 15,704 | (12,837) | 22,297 | (15,225) |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
In 2022, contributions for retirement and deferred compensation plans amount to \u20ac\u2009601\u00a0million. This mainly consists of:
Contributions of approximately \u20ac\u2009700\u00a0million are expected to be made in 2023.
The weighted average duration of the DBO for retirement plans and deferred compensation is 15\u00a0years at 31\u00a0December 2022 (31\u00a0December 2021: 18\u00a0years).
The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for the most significant plans is as follows:
Active | Deferred | Pensioner | |
|---|---|---|---|
Germany | 43% | 10% | 47% |
France | 99% | 0% | 1% |
UK | 63% | 16% | 21% |
Participation in BAE System Pension Scheme (Main Scheme) | 35% | 15% | 50% |
Canada | 82% | 2% | 16% |
The split of the present value of DBO for retirement plans and deferred compensation for the most significant plans is as follows:
Present value of DBO | Plan assets | |||
|---|---|---|---|---|
Retirement plans | Deferred Compensation plans | Retirement plans | Deferred Compensation plans | |
Germany | 83% | 17% | 81% | 19% |
France | 100% | 0% | 100% | 0% |
UK | 100% | 0% | 100% | 0% |
Participation in BAE System Pension Scheme (Main Scheme) | 100% | 0% | 100% | 0% |
Canada | 100% | 0% | 100% | 0% |
The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
(In \u20ac million) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Quoted prices | Unquoted prices | Total | Quoted prices | Unquoted prices | Total | |
Equity securities | ||||||
Europe | 565 | 0 | 565 | 1,539 | 0 | 1,539 |
Rest of the world | 128 | 0 | 128 | 408 | 0 | 408 |
Emerging markets | 417 | 0 | 417 | 561 | 0 | 561 |
Global | 1,959 | 898 | 2,857 | 2,896 | 693 | 3,589 |
Bonds | ||||||
Corporates | 2,502 | 1,114 | 3,616 | 3,125 | 283 | 3,408 |
Governments | 2,370 | 0 | 2,370 | 2,393 | 0 | 2,393 |
Pooled investments vehicles | 725 | 0 | 725 | 328 | 0 | 328 |
Commodities | 0 | 0 | 0 | 0 | 0 | 0 |
Hedge funds | 0 | 0 | 0 | 0 | 459 | 459 |
Derivatives | 0 | (278) | (278) | 0 | (71) | (71) |
Property | 0 | 767 | 767 | 0 | 723 | 723 |
Cash and money market funds | 202 | 144 | 346 | 344 | 263 | 607 |
Others | 0 | 1,324 | 1,324 | 0 | 1,281 | 1,281 |
Balance at 31 December | 8,868 | 3,969 | 12,837 | 11,594 | 3,631 | 15,225 |
The majority of funded plans apply broadly an asset-liability matching framework. The strategic asset allocation of the plans takes into account the characteristics of the underlying obligations. Investments are widely diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2022 consists of fixed income and equity instruments, although the Company also invests in property, commodities and hedge funds. The Company reassesses the characteristics of the pension obligations from time to time or as required by the applicable regulation or governance framework. This typically triggers a subsequent review of the strategic asset allocation.
The amount recorded as provision for retirement and deferred compensation plans can be allocated to the countries as follows:
(In \u20ac million) | Pension plans of the Company | Participation in BAE Systems Pension Scheme in the UK | Total | |||
|---|---|---|---|---|---|---|
Germany | France | UK | Canada | |||
DBO | 10,157 | 1,243 | 1,100 | 436 | 2,768 | 15,704 |
Plan assets | 7,957 | 19 | 1,356 | 351 | 3,154 | 12,837 |
Recognised at 31 December 2022 | 2,200 | 1,224 | (256) | 85 | (386) | 2,867 |
DBO | 13,330 | 1,941 | 1,858 | 570 | 4,598 | 22,297 |
Plan assets | 9,063 | 21 | 1,858 | 411 | 3,872 | 15,225 |
Recognised at 31 December 2021 | 4,267 | 1,920 | 0 | 159 | 726 | 7,072 |
In general, in the aerospace sector, the contractual and technical parameters considered for provision calculations are complex. Hence uncertainty exists with regard to the timing and amounts of expenses to be taken into account.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for pensions | 3,509 | 7,072 |
Other provisions | 7,514 | 8,209 |
Total | 11,023 | 15,281 |
thereof non-current portion | 6,896 | 10,771 |
thereof current portion | 4,127 | 4,510 |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
As a consequence of the increased discount rates a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
Other provisions\u00a0decreased mainly due to the decrease in provisions for onerous contracts due to the utilisation and net presentation of the A400M programme losses against inventories, the reduction in the A220 programme and the release of compliance-related provisions.
Movements in other provisions during the year were as follows:
(In \u20ac million) | Balance at | Exchange differences | Increase from passage | Additions | Reclassification/ Change in consolidated | Used | Released | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Onerous contracts | 2,249 | 56 | 0 | 300 | 211 | (945) | (63) | 1,808 |
Outstanding costs | 1,376 | 3 | 0 | 376 | 0 | (283) | (98) | 1,374 |
Aircraft financing risks\u00a0(1) | 17 | 1 | 0 | 0 | 0 | (11) | (2) | 5 |
Obligation from services and maintenance agreements | 491 | 1 | 8 | 11 | 0 | (53) | (74) | 384 |
Warranties | 372 | 5 | (3) | 99 | 12 | (53) | (35) | 397 |
Personnel-related provisions\u00a0(2) | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
Litigation and claims\u00a0(3) | 728 | 2 | 0 | 156 | (9) | (29) | (517) | 331 |
Asset retirement | 151 | 0 | 5 | 9 | 0 | 0 | (18) | 147 |
Other risks and charges | 2,056 | (4) | (6) | 812 | (8) | (395) | (130) | 2,325 |
Total | 8,209 | 65 | 6 | 2,184 | 181 | (2,133) | (998) | 7,514 |
(1) See \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d. (2) See \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d. (3) See \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. |
Provisions for onerous contracts in 2022 mainly include the utilisation and net presentation of the A400M programme losses against inventories and the reduction in the A220 programme.
Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see \u201c\u2013 Note\u00a031: Personnel-Related Provisions\u201d.
Provisions for litigation and claims decreased mainly due to the release of compliance-related provisions for an amount of \u20ac\u20090.3\u00a0billion.
Contingent assets and contingent liabilities \u2014 The Company is exposed to technical and commercial contingent obligations due to the nature of its businesses. To mitigate this exposure, the Company has subscribed a Global Aviation Insurance Programme (\u201cGAP\u201d). Information required under IAS\u00a037 \u201cProvisions, Contingent Assets and Contingent Liabilities\u201d is not disclosed if the Company concludes that disclosure can be expected to prejudice seriously its position in a dispute with other parties.
For other contingent liabilities, see \u201c\u2013 Note\u00a039: Litigation and Claims\u201d and \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d (mainly A400M programme).Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-12": { "value": "Research and development expenses \u2014 The costs for internally generated research are expensed when incurred. The costs for internally generated development are capitalised when:Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3401": { "value": "Capitalised development costs, are recognised either as intangible assets or, when the related development activities lead to the construction of specialised tooling for production (\u201cjigs and tools\u201d), or involve the design, construction and testing of prototypes and models, as property, plant and equipment. Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, they are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales.Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:
Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
Property, plant and equipment as of 31\u00a0December 2022 and 2021 comprises the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross | Depreciation / Impairment | Net book | Gross | Depreciation / Impairment | Net book | |
Land, leasehold improvements and buildings, including buildings on land owned by others | 10,536 | (5,539) | 4,997 | 10,344 | (5,324) | 5,020 |
Technical equipment and machinery | 21,982 | (15,286) | 6,696 | 23,697 | (16,609) | 7,088 |
Other equipment, factory and office equipment\u00a0(1) | 3,932 | (3,107) | 825 | 3,853 | (3,013) | 840 |
Construction in progress | 2,241 | 0 | 2,241 | 1,890 | 0 | 1,890 |
Right-of-use assets\u00a0(2) | 2,578 | (832) | 1,746 | 2,486 | (788) | 1,698 |
Total | 41,269 | (24,764) | 16,505 | 42,270 | (25,734) | 16,536 |
(1) Includes the net book value of aircraft under operating lease (see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d). (2) The net book value of Land and Buildings under Right-of-use assets amounts to \u20ac\u20091,625\u00a0million. |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi- | Disposals | Depreciation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 5,020 | (20) | 21 | 4 | 227 | (21) | (234) | 4,997 |
Technical equipment and machinery | 7,088 | 10 | 310 | 2 | 942 | (44) | (1,612) | 6,696 |
Other equipment, factory and office equipment | 840 | 10 | 299 | 6 | 62 | (215) | (177) | 825 |
Construction in progress | 1,890 | (5) | 1,479 | 0 | (1,123) | 0 | 0 | 2,241 |
Right-of-use assets | 1,698 | 33 | 308 | 0 | (29) | (40) | (224) | 1,746 |
Total | 16,536 | 28 | 2,417 | 12 | 79 | (320) | (2,247) | 16,505 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Depreciation / Impairment (1) | Balance at |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 4,681 | 43 | 48 | 5 | 641 | (71) | (327) | 5,020 |
Technical equipment and machinery | 7,068 | 106 | 225 | 1 | 1,038 | (66) | (1,284) | 7,088 |
Other equipment, factory and office equipment | 811 | 14 | 150 | 2 | 66 | (7) | (196) | 840 |
Construction in progress | 2,310 | 16 | 1,289 | 2 | (1,678) | (49) | 0 | 1,890 |
Right-of-use assets | 1,804 | 59 | 240 | 0 | (96) | (49) | (260) | 1,698 |
Total | 16,674 | 238 | 1,952 | 10 | (29) | (242) | (2,067) | 16,536 |
(1) Accelerated depreciation previously included in onerous contract provision has been offset with the release of the provision in the presentation of the Consolidated Statement of Cash Flows for the year ended 2021. |
Property, plant and equipment decreased by \u20ac\u2009-31\u00a0million to \u20ac\u200916,505\u00a0million (2021: \u20ac\u200916,536\u00a0million). Property, plant and equipment include right-of-use assets for an amount of \u20ac\u20091,746\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,698\u00a0million).
Following the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 on 21\u00a0December 2022, the corresponding fixed assets were written-off for a total of \u20ac\u2009248\u00a0million and an impairment of \u20ac\u2009184\u00a0million has been recorded for the remaining Pl\u00e9iades Neo assets value partly offset by the insurance receivable of \u20ac\u2009200\u00a0million, all recognized as of 31\u00a0December 2022 in other income and other expenses (see \u201c\u2013 Note\u00a015: Other Income and Other Expenses\u201d).
Based on management\u2019s best estimate, there is no impact on the useful life of Property, plant and equipment, considering the Company\u2019s journey towards sustainable aerospace, climate risks and current amortisation schemes over asset life (see \u201c\u2013 Note 7: Climate Impacts\u201d).
For details on assets related to lease arrangements on sales financing, see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
France | 7,423 | 7,570 |
Germany | 4,124 | 4,185 |
UK | 1,433 | 1,604 |
Spain | 1,267 | 1,273 |
Other countries | 2,258 | 1,904 |
Total | 16,505 | 16,536 |
The Company leases mainly real estate assets, cars and equipment (such as land, warehouses, storage facilities and offices).
Short-term leases and leases of low-value assets refer mainly to IT equipment (e.g. printers, laptops and mobile phones) and other equipment.
The Company incurred interest expense on lease liabilities of \u20ac\u200931\u00a0million. The expense in relation to short-term and low-value assets is insignificant.
There are no significant variable lease payments included in the Company\u2019s lease arrangements.
The discount rate used to determine the right-of-use asset and the lease liability for each country and leased asset is calculated based on the incremental borrowing rate at inception of the lease. The Company calculated the rate applicable to each lease contract on the basis of the lease duration.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is shown in \u201cNote\u00a038.1 \u2013 Financial Risk Management\u201d.
The Company leases land and buildings mainly for its operational business warehouses including logistic facilities, offices, production halls and laboratories. The major leases are located in France, Germany, the US, Canada and China. As lease contracts are negotiated on an individual basis, lease terms contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3-25\u00a0years and may include extension, termination and other options, which provide operational flexibility to the Company.
The Company leases cars for management and other functions. Vehicle leases typically run for an average period of three years and do not provide renewal options.
The Company also leases IT equipment, machinery and other equipment that combined are insignificant to the total leased asset portfolio.
Intangible assets comprise (i)\u00a0goodwill (see \u201c\u2013 Note\u00a08: Scope of Consolidation\u201d), (ii)\u00a0capitalised development costs (see \u201c\u2013 Note\u00a04: Significant Accounting Policies\u201d) and (iii)\u00a0other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
The Company has capitalised development costs in the amount of \u20ac\u20091,482\u00a0million as of 31\u00a0December 2022 (\u20ac\u20091,286\u00a0million as of 31\u00a0December 2021), for Airbus programmes (\u20ac\u2009785\u00a0million), Airbus Defence and Space (\u20ac\u2009372\u00a0million) and Airbus Helicopters (\u20ac\u2009325\u00a0million). The Company believes that its current portfolio of aircraft and helicopters, which represents a significant portion of its Capitalised Development Costs, could play a pivotal role in achieving near term targets set out by the Company and its customers\u2019 decarbonisation ambitions. This will be achieved by the replacement of less fuel efficient aircraft. The Company\u2019s commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% SAF by 2030 would further substantiate their useful life. Therefore, management estimates that there is no impact on the useful life of capitalised development costs resulting from the Company\u2019s journey towards sustainable aerospace.
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.
The Company tested the intangible assets for which an indicator of impairment was identified. In particular, the Company tested the intangible assets associated with some aircraft programmes and concluded that no impairment was necessary.
As of 31\u00a0December 2022 and 2021, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
(In \u20ac million) | Airbus | Airbus | Airbus Defence and Space | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Goodwill as of 31 December 2022 | 10,816 | 199 | 2,150 | 0 | 13,165 |
Goodwill as of 31 December 2021 | 10,731 | 139 | 2,158 | 0 | 13,028 |
The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2022 led to no impairment charge. The Company performed sensitivity tests in order to confirm that the recoverability of its long-lived assets was not impaired by climate change. No reasonably possible changes in the main assumptions used (including climate change) would cause the value in use of the goodwill to fall below its carrying value.
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-18": { "value": "Capitalised development costs, are recognised either as intangible assets or, when the related development activities lead to the construction of specialised tooling for production (\u201cjigs and tools\u201d), or involve the design, construction and testing of prototypes and models, as property, plant and equipment. Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, they are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales.Intangible assets comprise (i)\u00a0goodwill (see \u201c\u2013 Note\u00a08: Scope of Consolidation\u201d), (ii)\u00a0capitalised development costs (see \u201c\u2013 Note\u00a04: Significant Accounting Policies\u201d) and (iii)\u00a0other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
The Company has capitalised development costs in the amount of \u20ac\u20091,482\u00a0million as of 31\u00a0December 2022 (\u20ac\u20091,286\u00a0million as of 31\u00a0December 2021), for Airbus programmes (\u20ac\u2009785\u00a0million), Airbus Defence and Space (\u20ac\u2009372\u00a0million) and Airbus Helicopters (\u20ac\u2009325\u00a0million). The Company believes that its current portfolio of aircraft and helicopters, which represents a significant portion of its Capitalised Development Costs, could play a pivotal role in achieving near term targets set out by the Company and its customers\u2019 decarbonisation ambitions. This will be achieved by the replacement of less fuel efficient aircraft. The Company\u2019s commitment to certify all current aircraft and helicopter programmes to be capable of flying on 100% SAF by 2030 would further substantiate their useful life. Therefore, management estimates that there is no impact on the useful life of capitalised development costs resulting from the Company\u2019s journey towards sustainable aerospace.
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.
The Company tested the intangible assets for which an indicator of impairment was identified. In particular, the Company tested the intangible assets associated with some aircraft programmes and concluded that no impairment was necessary.
As of 31\u00a0December 2022 and 2021, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
(In \u20ac million) | Airbus | Airbus | Airbus Defence and Space | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Goodwill as of 31 December 2022 | 10,816 | 199 | 2,150 | 0 | 13,165 |
Goodwill as of 31 December 2021 | 10,731 | 139 | 2,158 | 0 | 13,028 |
The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2022 led to no impairment charge. The Company performed sensitivity tests in order to confirm that the recoverability of its long-lived assets was not impaired by climate change. No reasonably possible changes in the main assumptions used (including climate change) would cause the value in use of the goodwill to fall below its carrying value.
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Write-down | Net book value | Gross amount | Write-down | Net book value | |
Raw materials and manufacturing supplies | 4,387 | (643) | 3,744 | 3,773 | (705) | 3,068 |
Work in progress | 20,484 | (1,229) | 19,255 | 19,553 | (2,010) | 17,542 |
Finished goods and parts for resale | 5,218 | (1,060) | 4,158 | 5,356 | (800) | 4,556 |
Advance payments to suppliers | 5,114 | (69) | 5,045 | 3,491 | (119) | 3,372 |
Total | 35,203 | (3,001) | 32,202 | 32,173 | (3,634) | 28,538 |
Inventories of \u20ac\u200932,202\u00a0million (2021: \u20ac\u200928,538\u00a0million) increased by \u20ac\u2009+3,664\u00a0million. This is driven by Airbus (\u20ac\u2009+3,825\u00a0million), mainly reflecting the inventory build up to support ramp up. It also includes higher advance payments made to suppliers.
In 2022, write-downs of inventories in the amount of \u20ac\u2009-394\u00a0million (2021: \u20ac\u2009-655\u00a0million) are recognised in cost of sales, whereas reversal of write-downs amounts to \u20ac\u2009243\u00a0million (2021: \u20ac\u2009459\u00a0million). At 31\u00a0December 2022, \u20ac\u200918,099\u00a0million of work in progress and \u20ac\u20094,015\u00a0million of finished goods and parts for resale were carried at net realisable value.
Inventories recognised as an expense during the period amount to \u20ac\u200935,710\u00a0million (2021: \u20ac\u200932,388\u00a0million).", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-15": { "value": "Inventories are measured at the lower of acquisition cost (generally the average cost) or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labour, and production related overheads (based on normal operating capacity and normal consumption of material, labour and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs to complete the sale.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-32": { "value": "Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Transactions in foreign currency, i.e. transactions in currencies other than the functional currency of an entity of the Company, are translated into the functional currency at the foreign exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are remeasured into the functional currency at the exchange rate in effect at that date. Except when deferred in equity as qualifying cash flow hedges (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d), these foreign exchange remeasurement gains and losses are recognised, in line with the underlying item:
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.By the nature of its activities, the Company is exposed to a variety of financial risks: (i)\u00a0market risks, in particular foreign exchange risk, but also interest rate risk, equity price risk and commodity price risk, (ii)\u00a0liquidity risk and (iii)\u00a0credit risk. The Company\u2019s overall financial risk management activities focus on mitigating unpredictable financial market risks and their potential adverse effects on the Company\u2019s operational and financial performance.
The financial risk management of the Company is generally carried out by the Treasury department of the Company under policies approved by the Board of Directors or by the Chief Financial Officer. The identification, evaluation and hedging of the financial risks is in the joint responsibility of several established specific committees such as the Foreign Exchange Committee and the Asset Liability Management Committee, including the Company business segments.
The Company uses financial derivatives solely for risk mitigating purposes (\u201chedging\u201d) and applies hedge accounting for a significant portion of its hedging portfolio.
Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3443": { "value": "Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-41": { "value": "Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-40": { "value": "Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Trade receivables arise when the Company provides goods or services directly to a customer with no intention of trading the receivable. Trade receivables include claims arising from revenue recognition that are not yet settled by the debtor. Trade receivables are initially recognised at their transaction prices and are subsequently measured at amortised cost less any allowances for impairment. Gains and losses are recognised in the Consolidated Income Statement when the receivables are derecognised and impaired.Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.Financial instruments \u2014 The Company\u2019s financial assets mainly consist of cash, short to medium-term deposits and securities. Its financial liabilities include trade liabilities, obligations towards financial institutions, issued bonds and refundable advances from European Governments. All purchases and sales of financial assets are recognised on the settlement date according to market conventions.Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).The Company assigns its financial instruments into classes based on their balance sheet category.Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Positive fair values of derivative financial instruments\u00a0(1) | 753 | 664 |
Others | 28 | 27 |
Total non-current other financial assets | 781 | 691 |
Receivables from related companies | 1,104 | 803 |
Positive fair values of derivative financial instruments\u00a0(1) | 1,141 | 341 |
Others | 297 | 307 |
Total current other financial assets | 2,542 | 1,451 |
Total | 3,323 | 2,142 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Liabilities for derivative financial instruments\u00a0(1) | 6,163 | 2,640 |
European Governments\u2019 refundable advances\u00a0(2) | 3,717 | 3,730 |
Others | 237 | 192 |
Total non-current other financial liabilities | 10,117 | 6,562 |
Liabilities for derivative financial instruments\u00a0(1) | 3,450 | 1,923 |
European Governments\u2019 refundable advances\u00a0(2) | 140 | 131 |
Liabilities to related companies | 186 | 180 |
Others | 297 | 298 |
Total current other financial liabilities | 4,073 | 2,532 |
Total | 14,190 | 9,094 |
thereof other financial liabilities due within 1\u00a0year | 4,073 | 2,532 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. (2) Refundable advances from European Governments are provided to the Company to finance research and development activities for certain projects on a risk-sharing basis, i.e. they are repaid to the European Governments subject to the success of the project. |
The total net fair value of derivative financial instruments decreased by \u20ac -4,161\u00a0million to \u20ac\u2009-7,719\u00a0million (2021: \u20ac\u2009-3,558\u00a0million) as a result of the strengthened US dollar versus the euro associated with the mark to market valuation of the hedge portfolio.
In 2022, the European Governments\u2019 refundable advances decreased by \u20ac\u2009-4\u00a0million to \u20ac\u20093,857\u00a0million (2021: \u20ac\u20093,861\u00a0million).
The allocation of European Governments\u2019 refundable advances between non-current and current presented in the Consolidated Financial Statements ended 31\u00a0December 2022 is based on the applicable contractual repayment dates.Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.The contract or notional amounts of derivative financial instruments shown below do not necessarily represent amounts exchanged by the parties and, thus, are not necessarily a measure for the exposure of the Company through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, specified by year of expected maturity:
(In \u20ac million) | Remaining period | Total | |||||
|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | > 5 years | ||
31\u00a0December 2022 | |||||||
Net forward and swap contracts | 20,076 | 18,636 | 12,128 | 8,100 | 7,284 | 1,201 | 67,425 |
31\u00a0December 2021 | |||||||
Net forward sales contracts | 21,225 | 17,923 | 17,102 | 10,899 | 8,161 | 7,233 | 82,543 |
The following table sets out the notional amount of foreign exchange hedges in place as of 31\u00a0December 2022 relating to the commercial activities of Airbus, and the average euro converted rates applicable to corresponding EBIT.
(In $ million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 22,737 | 21,274 | 13,772 | 9,138 | 9,467 | 76,388 |
Forward rates | ||||||
\u20ac/US$ | 1.21 | 1.23 | 1.24 | 1.30 | 1.30 | 1.24 |
In 2022 new hedge contracts of US$ 7.5\u00a0billion (2021: US$ 29.5\u00a0billion) were added at an average rate of 1.12 US$/\u20ac\u2009 (2021: 1.21 US$/\u20ac).
As of 31\u00a0December 2022, the total hedge portfolio with maturities up to 2029 amounts to US$ 76.4\u00a0billion (2021: US$ 88.3\u00a0billion) and covers a major portion of the foreign exchange exposure expected over the hedging horizon. The average US$/\u20ac hedge rate of the US$/\u20ac hedge portfolio until 2029 amounts to 1.24 US$/\u20ac\u2009(2021: 1.25 US$/\u20ac).
(In \u00a3 million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 852 | 789 | 537 | 333 | 311 | 2,822 |
Forward rates | ||||||
\u20ac/\u00a3 | 0.88 | 0.89 | 0.90 | 0.91 | 0.93 | 0.89 |
Since 2021, \u20ac/\u00a3 hedges were implemented in order to cover the GBP exposure of the Company.
The notional amounts of interest rate contracts are as follows:
(In \u20ac million) | Remaining period | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | 6 years | 7 years | > 7 years | ||
31\u00a0December 2022 | |||||||||
Interest rate contracts | 0 | 823 | 561 | 1,355 | 1,406 | 611 | 500 | 4,150 | 9,406 |
31\u00a0December 2021 | |||||||||
Interest rate contracts | 12 | 0 | 1,000 | 750 | 1,850 | 1,324 | 750 | 4,650 | 10,336 |
Please also refer to \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d.
The notional amounts of commodity contracts are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 13 | 4 | 0 | 0 | 0 | 17 |
31\u00a0December 2021 | 20 | 21 | 3 | 0 | 0 | 44 |
The notional amounts of equity swaps are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 17 | 22 | 14 | 0 | 0 | 53 |
31\u00a0December 2021 | 18 | 17 | 18 | 10 | 0 | 63 |
The following table presents the reconciliation of AOCI, net of tax, resulting from cash flow hedge accounting as of 31\u00a0December 2022 and 31\u00a0December 2021:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Hedge reserve | ||
Opening balance | 3,448 | (262) |
Foreign exchange contracts | 5,575 | 5,279 |
Others | 34 | 12 |
Changes in fair values | 5,609 | 5,291 |
Foreign exchange contracts | (2,358) | (64) |
Others | (7) | (3) |
Amount reclassified to profit or loss (matured hedges) | (2,365) | (67) |
Foreign exchange contracts | (146) | (106) |
Others | (1) | 1 |
Amount classified to profit or loss (inefficiency) | (147) | (105) |
Tax impact | (857) | (1,409) |
Closing balance | 5,688 | 3,448 |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2022:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 1,492 | (7,643) | 4,429 | 1,146 | (146) | (2,358) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 0 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (60) | 36 | 0 | 0 | (7) |
Interest rate risk | 0 | 0 | 0 | 0 | 0 | 0 |
Commodity swap risk | 6 | 0 | (2) | 0 | (1) | 0 |
Equity swap risk | 1 | (4) | 0 | 0 | 0 | 0 |
Total | 1,499 | (7,707) | 4,463 | 1,146 | (147) | (2,365) |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2021:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 637 | (4,092) | 5,349 | (72) | (106) | (64) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 2 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (40) | 30 | 0 | 0 | (3) |
Interest rate risk | 0 | (1) | 0 | 0 | 0 | 0 |
Commodity swap risk | 7 | (3) | (12) | 0 | 1 | 0 |
Equity swap risk | 3 | (5) | (6) | 0 | 0 | 0 |
Total | 647 | (4,141) | 5,361 | (70) | (105) | (67) |
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Interest income derived from the Company\u2019s asset management and lending activities is recognised as interest accrues, using the effective interest rate method.
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Other investments | 2,641 | 2,511 |
Other long-term financial assets | 1,549 | 1,490 |
Total non-current other investments and other long-term financial assets | 4,190 | 4,001 |
Current portion of other long-term financial assets | 665 | 537 |
Total | 4,855 | 4,538 |
Other investments mainly comprise the Company\u2019s participations and include the remaining investment in Dassault Aviation (9.90%, 2021: 9.90%) amounting to \u20ac\u20091,309\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u2009786\u00a0million). It is partly offset by the decrease in fair value of other investments.
Other long-term financial assets and the current portion of other long-term financial assets include other loans in the amount of \u20ac\u20092,129\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,909\u00a0million), and the sales financing activities in the form of finance lease receivables and loans from aircraft financing.Contract assets represent the Company\u2019s right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned by something other than the passage of time (e.g. revenue recognised from the application of the PoC method before the Company has a right to invoice).
Contract liabilities represent the Company\u2019s obligation to transfer goods or services to a customer for which the Company has received consideration, or for which an amount of consideration is due from the customer (e.g. advance payments received).
Net contract assets and contract liabilities are determined for each contract separately. For serial contracts, contract liabilities are presented in current contract liabilities, if revenues are expected within the next twelve months or material expenses for the manufacturing process have already occurred. For long-term production contracts (e.g. governmental contracts such as A400M, Tiger, NH90), contract liabilities are classified as current when the relating inventories or receivables are expected to be recognised within the normal operating cycle of the long-term contract.
Trade receivables arise when the Company provides goods or services directly to a customer with no intention of trading the receivable. Trade receivables include claims arising from revenue recognition that are not yet settled by the debtor. Trade receivables are initially recognised at their transaction prices and are subsequently measured at amortised cost less any allowances for impairment. Gains and losses are recognised in the Consolidated Income Statement when the receivables are derecognised and impaired.
Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.
Significant changes in contract assets and contract liabilities during the period are as follows:
(In \u20ac million) | 2022 | 2021 | ||
|---|---|---|---|---|
Contract | Contract liabilities | Contract | Contract | |
Revenue recognised that was included in the contract liability\u00a0 | - | (23,494) | - | (19,311) |
Increases due to cash received, excluding amounts recognised as revenue\u00a0(1) | - | 26,797 | - | 17,792 |
Transfers from contract assets recognised at 1\u00a0January | (2,798) | - | (5,765) | - |
Increase as a result of changes in the measure of progress | 3,034 | - | 6,045 | - |
(1) Including final payments received from customers and others parties in anticipation. |
As of 31\u00a0December 2022, trade receivables amounting to \u20ac\u2009301\u00a0million (2021: \u20ac\u2009210\u00a0million) will mature after more than one year.
The respective movement in the allowance for expected credit losses in respect of trade receivables and contract assets during the period was as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Allowance balance at 1\u00a0January | (363) | (306) |
Utilisations / disposals and business combinations | 56 | 47 |
Additions | (73) | (104) |
Allowance balance at 31\u00a0December | (380) | (363) |
Trade liabilities of \u20ac\u200913,261\u00a0million (2021: \u20ac\u20099,693\u00a0million) increased by \u20ac +3,568\u00a0million, mainly driven by higher volume and payment terms increase linked to certain agreements reached with suppliers.
As of 31\u00a0December 2022, trade liabilities amounting to \u20ac\u200986\u00a0million (2021: \u20ac\u200989\u00a0million) will mature after more than one year.(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Positive fair values of derivative financial instruments\u00a0(1) | 753 | 664 |
Others | 28 | 27 |
Total non-current other financial assets | 781 | 691 |
Receivables from related companies | 1,104 | 803 |
Positive fair values of derivative financial instruments\u00a0(1) | 1,141 | 341 |
Others | 297 | 307 |
Total current other financial assets | 2,542 | 1,451 |
Total | 3,323 | 2,142 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Liabilities for derivative financial instruments\u00a0(1) | 6,163 | 2,640 |
European Governments\u2019 refundable advances\u00a0(2) | 3,717 | 3,730 |
Others | 237 | 192 |
Total non-current other financial liabilities | 10,117 | 6,562 |
Liabilities for derivative financial instruments\u00a0(1) | 3,450 | 1,923 |
European Governments\u2019 refundable advances\u00a0(2) | 140 | 131 |
Liabilities to related companies | 186 | 180 |
Others | 297 | 298 |
Total current other financial liabilities | 4,073 | 2,532 |
Total | 14,190 | 9,094 |
thereof other financial liabilities due within 1\u00a0year | 4,073 | 2,532 |
(1) See \u201c\u2013 Note\u00a038: Financial Instruments\u201d. (2) Refundable advances from European Governments are provided to the Company to finance research and development activities for certain projects on a risk-sharing basis, i.e. they are repaid to the European Governments subject to the success of the project. |
The total net fair value of derivative financial instruments decreased by \u20ac -4,161\u00a0million to \u20ac\u2009-7,719\u00a0million (2021: \u20ac\u2009-3,558\u00a0million) as a result of the strengthened US dollar versus the euro associated with the mark to market valuation of the hedge portfolio.
In 2022, the European Governments\u2019 refundable advances decreased by \u20ac\u2009-4\u00a0million to \u20ac\u20093,857\u00a0million (2021: \u20ac\u20093,861\u00a0million).
The allocation of European Governments\u2019 refundable advances between non-current and current presented in the Consolidated Financial Statements ended 31\u00a0December 2022 is based on the applicable contractual repayment dates.Sales financing \u2014 With a view to facilitating aircraft sales for Airbus and Airbus Helicopters, the Company may enter into either on-balance sheet or off-balance sheet sales financing transactions.
On-balance sheet transactions where the Company is lessor are classified as operating leases, finance leases and loans, inventories and to a minor extent, equity investments:
Off-balance sheet commitments \u2014 Financing commitments are provided to the customer either as backstop commitments before delivery, asset value guarantees at delivery or counter guarantees:
As of 31\u00a0December 2022, the nominal value of asset value guarantees considered as variable considerations under IFRS\u00a015 provided to beneficiaries amounts to \u20ac\u2009247\u00a0million (2021: \u20ac\u2009381\u00a0million), excluding \u20ac\u20099\u00a0million (2021: \u20ac\u20099\u00a0million) where the risk is considered to be remote. The present value of the risk inherent in asset value guarantees where a settlement is being considered probable is fully provided for and included in the total of contract liabilities for an amount of \u20ac\u2009236\u00a0million (2021: \u20ac\u2009345\u00a0million) (see \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
Exposure \u2014 In terms of risk management, the Company manages its gross exposure arising from its sales financing activities (\u201cGross Customer Financing Exposure\u201d) separately for (i)\u00a0customer\u2019s credit risk and (ii)\u00a0asset value risk.
Gross Customer Financing Exposure is the sum of (i)\u00a0the book value of operating leases before impairment, (ii)\u00a0the outstanding principal amount of finance leases or loans due before impairment, (iii)\u00a0the guaranteed amounts under financial guarantees (iv)\u00a0the book value of second hand aircraft for resale before impairment, and (v)\u00a0the outstanding value of any other investment in sales financing structured entities before impairment. This Gross Customer Financing Exposure may differ from the value of related assets on the Company\u2019s Statement of Financial Position and related off-balance sheet contingent commitments, mainly because (i)\u00a0assets are recorded in compliance with IFRS, but may relate to transactions that are financed on a limited recourse basis and (ii)\u00a0the carrying amount of the assets on the Consolidated Statement of Financial Position may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$\u202f0.4\u00a0billion (\u20ac\u20090.3\u2009billion) (2021: US$\u202f0.5\u00a0billion (\u20ac\u20090.4\u00a0billion)).
Net exposure is the difference between Gross Customer Financing Exposure and the collateral value. Collateral value is assessed using a dynamic model based on the net present value of expected future receivables, expected proceeds from resale and potential cost of default. This valuation model yields results that are typically lower than residual value estimates by independent sources in order to allow for what management believes is its conservative assessment of market conditions and for repossession and transformation costs. The net exposure is provided for by way of impairment losses and other provisions.
Impairment losses and provisions \u2014 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\u2019s carrying amount over the higher of the aircraft\u2019s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on\u00a0the 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 \u2014 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\u2019s 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\u00a0December 2022 the carrying amount of its loans from aircraft financing amounts to \u20ac\u200949\u00a0million (2021: \u20ac\u200977\u00a0million). This amount also represents the Company\u2019s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.
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\u00a0December 2022 and 31\u00a0December 2021 are as follows:
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2022 | 130 | 62 |
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2021 | 126 | 65 |
Direct customer financing cash flows amount to \u20ac\u2009-146\u00a0million in 2022 (2021: \u20ac\u200928\u00a0million).
The on-balance sheet assets relating to sales financing, the off-balance sheet commitments and the related financing exposure (not including asset value guarantees) as of 31\u00a0December 2022 and 2021 are as follows:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Airbus | Airbus Helicopters | Total | Airbus | Airbus Helicopters | Total | |
Operating leases\u00a0(1) | 102 | 0 | 102 | 105 | 13 | 118 |
Finance leases and loans | 101 | 31 | 132 | 145 | 19 | 164 |
Inventories | 37 | 0 | 37 | 11 | 0 | 11 |
Other investments | 66 | 0 | 66 | 62 | 0 | 62 |
On-balance sheet customer financing | 306 | 31 | 337 | 323 | 32 | 355 |
Off-balance sheet customer financing | 6 | 2 | 8 | 41 | 26 | 67 |
Gross Customer Financing Exposure | 312 | 33 | 345 | 364 | 58 | 422 |
Collateral values | (262) | (33) | (295) | (282) | (58) | (340) |
Net exposure | 50 | 0 | 50 | 82 | 0 | 82 |
Operating leases | 0 | 0 | 0 | (7) | 0 | (7) |
Finance leases and loans | (40) | 0 | (40) | (53) | 0 | (53) |
On-balance sheet commitments - inventories | (5) | 0 | (5) | (6) | 0 | (6) |
Off-balance sheet commitments - provisions\u00a0(2) | (5) | 0 | (5) | (16) | 0 | (16) |
Asset impairments, fair value adjustments\u00a0 | (50) | 0 | (50) | (82) | 0 | (82) |
(1) For 2022 and 2021, depreciation amounts to \u20ac\u200911\u00a0million and \u20ac\u20091\u00a0million respectively and related accumulated depreciation is \u20ac\u200914\u00a0million and \u20ac\u20098\u00a0million respectively. (2) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
The net cash position provides financial flexibility to fund the Company\u2019s operations, to react to business needs and risk profile and to return capital to the shareholders.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cash and cash equivalents | 15,823 | 14,572 |
Current securities | 1,762 | 1,317 |
Non-current securities | 6,013 | 6,794 |
Gross cash position | 23,598 | 22,683 |
Short-term financing liabilities | (2,142) | (1,946) |
Long-term financing liabilities | (10,631) | (13,094) |
Interest rate contracts\u00a0(1) | (1,394) | 97 |
Total | 9,431 | 7,740 |
(1) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance. |
The net cash position on 31\u00a0December 2022 amounted to \u20ac\u20099,431\u00a0million (2021: \u20ac\u20097,740\u00a0million), with a gross cash position of \u20ac\u200923,598\u00a0million (2021: \u20ac\u200922,683\u00a0million).
Derivative instruments recognised on the Company\u2019s Statement of Financial Position consist of (i)\u00a0instruments that are entered into as hedges of the Company\u2019s operating activities or interest result, and (ii)\u00a0embedded foreign currency derivatives that arise from separating the foreign currency component from certain operating contracts. Cash flows resulting from the settlement of these derivatives are therefore recorded as part of cash flow from operations. Similarly, financial assets and liabilities arising from customer financing activities and refundable advances from European Governments are considered part of operating activities and related cash flows are hence recognised as cash flows from operating activities.Cash and cash equivalents are composed of the following elements:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bank account and petty cash | 3,687 | 1,964 |
Short-term securities (at fair value through profit or loss) | 11,135 | 12,075 |
Short-term securities (at fair value through OCI) | 1,001 | 533 |
Total cash and cash equivalents | 15,823 | 14,572 |
Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, are recognised in cash equivalents.
Cash and cash equivalents have increased by \u20ac +1.3\u00a0billion from \u20ac\u200914.6\u00a0billion at 31\u00a0December 2021 to \u20ac\u200915.8\u00a0billion at 31\u00a0December 2022. They include payments received in advance from certain customers and payments made to suppliers in anticipation.
The main variations are as follows:
Cash provided by operating activities amounts to \u20ac +6.3\u00a0billion in 2022, mainly driven by a profit translated into cash, a positive phasing impact from contracts assets and liabilities reflecting higher advance payments and a positive impact from net payments made to suppliers in anticipation. It also reflects an increase in trade liabilities driven by higher volume and payment terms increase linked to certain agreements reached with suppliers. It is partly offset by the increase in inventory.
Cash used for investing activities amounts to \u20ac -3.1\u00a0billion, mainly reflecting capital expenditures.\u00a0
Cash used for financing activities amounts to \u20ac -2.1\u00a0billion. It mainly includes the cash distribution to Airbus\u00a0SE shareholders of \u20ac -1.2\u00a0billion and the bond buyback of \u20ac -1.0\u00a0billion.
Similar to previous years, the Company has supported its suppliers concerning supply chain financing arrangements. As of 31\u00a0December 2022, these arrangements have no impact on the Company\u2019s Consolidated Financial Statements. The Company evaluates such suppliers\u2019 early payment arrangements against a number of indicators to assess whether the payable continues to hold the characteristics of a trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed customary payment terms in the industry. As at 31\u00a0December 2022, the payables subject to supplier financing arrangements do not meet the criteria to be reclassified as borrowings.Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.By the nature of its activities, the Company is exposed to a variety of financial risks: (i)\u00a0market risks, in particular foreign exchange risk, but also interest rate risk, equity price risk and commodity price risk, (ii)\u00a0liquidity risk and (iii)\u00a0credit risk. The Company\u2019s overall financial risk management activities focus on mitigating unpredictable financial market risks and their potential adverse effects on the Company\u2019s operational and financial performance.
The financial risk management of the Company is generally carried out by the Treasury department of the Company under policies approved by the Board of Directors or by the Chief Financial Officer. The identification, evaluation and hedging of the financial risks is in the joint responsibility of several established specific committees such as the Foreign Exchange Committee and the Asset Liability Management Committee, including the Company business segments.
The Company uses financial derivatives solely for risk mitigating purposes (\u201chedging\u201d) and applies hedge accounting for a significant portion of its hedging portfolio.
Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.
The Company\u2019s policy is to maintain sufficient cash and cash equivalents at any time to meet its present and future commitments as they fall due. It manages its liquidity by holding adequate volumes of liquid assets and maintains a committed revolving credit facility,\u00a0in addition to the cash inflow generated by its operating business. The Company continues to keep the focus on low counterparty risk within its asset portfolio. In addition, it maintains a set of other funding sources, and accordingly may raise loans from commercial banks and Development Finance Institutions and issue bonds, notes and commercial papers or enter into security lending agreements. Adverse changes in the capital markets could increase its funding costs and limit its financial flexibility.
In particular, Airbus signed on 5\u00a0July 2022 a \u20ac\u20098\u00a0billion Sustainability Linked Revolving Syndicated Credit Facility in order to refinance its \u20ac\u20096\u00a0billion existing facility signed in 2020.
Management considers the Company has sufficient resources to continue operating for at least 12\u00a0months and that there are no material uncertainties about the Company\u2019s ability to continue as a going concern.
Further, the management of the vast majority of the Company\u2019s liquidity exposure is centralised by a daily cash concentration process. This process enables it to manage its liquidity surplus as well as its liquidity requirements according to the actual needs of its subsidiaries. In addition, management monitors the Company\u2019s liquidity reserve as well as the expected cash flows from its operations.
The contractual maturities of the Company\u2019s financial liabilities, based on undiscounted cash flows and including interest payments, if applicable, are as follows:
(In \u20ac million) | Carrying amount | Contractual cash flows | < 1 year | 1 year - | 2 years - | 3 years - | 4 years - | > 5 years |
|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||
Non-derivative financial liabilities | (26,753) | (29,230) | (15,885) | (1,791) | (936) | (1,760) | (1,192) | (7,666) |
Derivative financial liabilities | (9,613) | (10,861) | (3,538) | (2,647) | (1,610) | (1,118) | (537) | (1,411) |
Total | (36,366) | (40,091) | (19,423) | (4,438) | (2,546) | (2,878) | (1,729) | (9,077) |
31\u00a0December 2021 | ||||||||
Non-derivative financial liabilities | (25,387) | (27,962) | (12,072) | (1,000) | (1,539) | (1,095) | (2,381) | (9,875) |
Derivative financial liabilities | (4,563) | (6,193) | (1,887) | (1,661) | (1,245) | (728) | (440) | (232) |
Total | (29,950) | (34,155) | (13,959) | (2,661) | (2,784) | (1,823) | (2,821) | (10,107) |
Non-derivative financial liabilities included in the table above comprise financing liabilities as presented in \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d. Due to their specific nature, namely their risk-sharing features and uncertainty about the repayment dates, the European Governments\u2019 refundable advances, which amount to \u20ac -3,857\u00a0million at 31\u00a0December 2022 (\u20ac\u2009-3,861\u00a0million at 31\u00a0December 2021) are not included.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is as follows:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | (241) | (245) |
Later than one year and not later than five years | (747) | (758) |
Later than five years | (1,036) | (1,043) |
Total undiscounted lease liabilities | (2,024) | (2,046) |
Lease liabilities included in the statement of financial position | (1,734) | (1,736) |
Current | (242) | (245) |
Non-current | (1,492) | (1,491) |
The Company is exposed to credit risk to the extent of non-performance by either its customers (e.g. airlines) or its counterparts with regard to financial instruments or issuers of financial instruments for gross cash investments. However, it has policies in place to avoid concentrations of credit risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk resulting from financial instruments is managed by the Company. In order to ensure sufficient diversification, a credit limit system is used.
The Company monitors the performance of the individual financial instruments and the impact of market developments on their performance and takes appropriate action on foreseeable adverse development based on pre-defined procedures and escalation levels.
Sales of products and services are made to customers after having conducted appropriate internal credit risk assessment. In order to support sales, primarily at Airbus, Airbus Helicopters and ATR, the Company may agree to participate in customer financing, on a case-by-case basis either directly or through guarantees provided to third parties. In determining the amount and terms of the financing transaction, the Company takes into account the airline\u2019s credit rating and economic factors reflecting the relevant financial market conditions, together with appropriate assumptions as to the anticipated future value of the financed asset.
The booked amount of financial assets represents the maximum credit exposure. The credit quality of financial assets can be assessed by reference to external credit rating (if available) or internal assessment of customers\u2019 creditworthiness e.g. airlines by way of internal risk pricing methods. For further information relating to gross credit risk and impairment see \u201c\u2013 Note\u00a038.7: Impairment Losses\u201d.
Financial instruments \u2014 The Company\u2019s financial assets mainly consist of cash, short to medium-term deposits and securities. Its financial liabilities include trade liabilities, obligations towards financial institutions, issued bonds and refundable advances from European Governments. All purchases and sales of financial assets are recognised on the settlement date according to market conventions.
Financial assets at amortised cost \u2014 This category comprises assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. It includes trade receivables.
Financial assets at fair value through OCI \u2014 This category comprises:
Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).
The Company assigns its financial instruments into classes based on their balance sheet category.
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2022:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | ||
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,474 | 1,166 | 0 | 0 | 2,640 | 2,640 |
Customer financing | 86 | 0 | 0 | 0 | 86 | 86 |
Other loans\u00a0(2) | 0 | 0 | 2,129 | 2,129 | 2,129 | 2,129 |
Trade receivables | 0 | 0 | 4,953 | 4,953 | 4,953 | 4,953 |
Contract assets | 0 | 0 | 1,527 | 1,527 | 1,527 | 1,527 |
Other financial assets | ||||||
Derivative instruments | 1,894 | 0 | 0 | 0 | 1,894 | 1,894 |
Non-derivative instruments | 0 | 0 | 1,429 | 1,429 | 1,429 | 1,429 |
Securities | 0 | 7,775 | 0 | 0 | 7,775 | 7,775 |
Cash and cash equivalents | 11,135 | 1,001 | 3,687 | 3,687 | 15,823 | 15,823 |
Total | 14,589 | 9,942 | 13,725 | 13,725 | 38,256 | 38,256 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (8,681) | (9,071) | (8,681) | (9,071) |
Liabilities to financial institutions and others | 0 | 0 | (2,358) | (2,358) | (2,358) | (2,358) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,734) | (1,734) | (1,734) | (1,734) |
Other financial liabilities | ||||||
Derivative instruments | (9,613) | 0 | 0 | 0 | (9,613) | (9,613) |
European Governments\u2019 refundable advances\u00a0(3) | 0 | 0 | (3,857) | (3,857) | (3,857) | (3,857) |
Others | 0 | (83) | (636) | (636) | (719) | (719) |
Trade liabilities | 0 | 0 | (13,261) | (13,261) | (13,261) | (13,261) |
Total | (9,613) | (83) | (30,527) | (30,917) | (40,223) | (40,613) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) The European Governments\u2019 refundable advances of \u20ac\u2009-3,857\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2021:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | Financial instruments total | |
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,033 | 1,478 | 0 | 0 | 2,511 | 2,511 |
Customer financing | 118 | 0 | 0 | 0 | 118 | 118 |
Other loans\u00a0(2) | 0 | 0 | 1,909 | 1,909 | 1,909 | 1,909 |
Trade receivables\u00a0(3) | 0 | 0 | 4,957 | 4,957 | 4,957 | 4,957 |
Contract assets | 0 | 0 | 1,404 | 1,404 | 1,404 | 1,404 |
Other financial assets | ||||||
Derivative instruments | 1,005 | 0 | 0 | 0 | 1,005 | 1,005 |
Non-derivative instruments | 0 | 0 | 1,137 | 1,137 | 1,137 | 1,137 |
Securities | 0 | 8,111 | 0 | 0 | 8,111 | 8,111 |
Cash and cash equivalents | 12,075 | 533 | 1,964 | 1,964 | 14,572 | 14,572 |
Total | 14,231 | 10,122 | 11,371 | 11,371 | 35,724 | 35,724 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (11,061) | (11,886) | (11,061) | (11,886) |
Liabilities to financial institutions and others | 0 | 0 | (2,243) | (2,243) | (2,243) | (2,243) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,736) | (1,736) | (1,736) | (1,736) |
Other financial liabilities | ||||||
Derivative instruments | (4,563) | 0 | 0 | 0 | (4,563) | (4,563) |
European Governments\u2019 refundable advances\u00a0(4) | 0 | 0 | (3,861) | (3,861) | (3,861) | (3,861) |
Others | 0 | (16) | (654) | (654) | (670) | (670) |
Trade liabilities | 0 | 0 | (9,693) | (9,693) | (9,693) | (9,693) |
Total | (4,563) | (16) | (29,248) | (30,073) | (33,827) | (34,652) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) 2021 figures restated in accordance with 2022 presentation. (4) The European Governments\u2019 refundable advances of \u20ac\u2009-3,861\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The fair values disclosed for financial instruments accounted for at amortised cost reflect Level\u00a02 input. Otherwise, the Company determines mostly fair values based on Level\u00a01 and Level\u00a02 inputs and to a lesser extent on Level\u00a03 input.
The following table presents the carrying amounts of the financial instruments held for the three levels of the fair value hierarchy as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | Level 1 | Level 2 | Level 3 | Total | |
Financial assets measured at fair value | ||||||||
\u00a0Equity Investments | 1,896 | 0 | 744 | 2,640 | 1,808 | 0 | 703 | 2,511 |
\u00a0Derivative instruments | 0 | 1,894 | 0 | 1,894 | 0 | 1,005 | 0 | 1,005 |
\u00a0Securities | 7,775 | 0 | 0 | 7,775 | 8,111 | 0 | 0 | 8,111 |
\u00a0Customer financing | 0 | 0 | 86 | 86 | 0 | 0 | 118 | 118 |
\u00a0Cash equivalents | 11,135 | 1,001 | 0 | 12,136 | 12,075 | 533 | 0 | 12,608 |
Total | 20,806 | 2,895 | 830 | 24,531 | 21,994 | 1,538 | 821 | 24,353 |
Financial liabilities measured at fair value | ||||||||
\u00a0Derivative instruments | 0 | (9,529) | (84) | (9,613) | 0 | (4,485) | (78) | (4,563) |
\u00a0Other financial liabilities | 0 | 0 | (83) | (83) | 0 | 0 | (16) | (16) |
Total | 0 | (9,529) | (167) | (9,696) | 0 | (4,485) | (94) | (4,579) |
The development of financial instruments of Level\u00a03 is as follows:
(In \u20ac million) | Derivatives | Participations | Customer financing | Total | Written put options on NCI interests | Commodity swap agreements | Total |
|---|---|---|---|---|---|---|---|
Balance at 1\u00a0January 2021 | 0 | 465 | 237 | 702 | 0 | (12) | (12) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (119) | (119) | 0 | (95) | (95) |
Equity | 0 | 238 | 0 | 238 | (16) | 0 | (16) |
Settlements | 0 | 0 | 0 | 0 | 0 | 29 | 29 |
Release | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2021 | 0 | 703 | 118 | 821 | (16) | (78) | (94) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (32) | (32) | 0 | (98) | (98) |
Equity | 0 | 41 | 0 | 41 | (67) | 0 | (67) |
Settlements | 0 | 0 | 0 | 0 | 0 | 92 | 92 |
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2022 | 0 | 744 | 86 | 830 | (83) | (84) | (167) |
As at 31\u00a0December 2022, the fair value of the written put options on non-controlling interests (\u201cNCI puts\u201d) relating to ACLP amounts to \u20ac\u200983\u00a0million (2021: \u20ac\u200916\u00a0million) and includes a funding of ACLP by IQ in 2022.
The fair value of these NCI puts is derived from a discounted cash flow analysis using the latest operating plan and a projection over the lifetime of the A220 programme. In addition, a post-tax WACC of 9.74% is used to discount the forecasted cash flows, taking into account the specificities of the programme (2021: 9.58%).
The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
The Company reports all its financial assets and financial liabilities on a gross basis. With each derivative counterparty there are master netting agreements in place providing for the immediate close-out of all outstanding derivative transactions and payment of the net termination amount in the event a party to the agreement defaults or another defined termination event occurs. Furthermore, securities lending transactions are accounted for as collateralised borrowings. As a result, the securities pledged as collateral continue to be recognised on the balance sheet and the amount of cash received at the outset of the transaction is separately recognised as a financial liability. The following tables set out, on a counterparty specific basis, the potential effect of master netting agreements and collateralised borrowings on the Company\u2019s Financial Position, separately for financial assets and financial liabilities that were subject to such agreements as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | Gross | Gross | Net amounts presented in the Financial Statements | Related amounts not set off | Net amount | |
|---|---|---|---|---|---|---|
Financial instruments | Cash | |||||
31\u00a0December 2022 | ||||||
Financial asset | 1,821 | 0 | 1,821 | (1,820) | 0 | 1 |
Financial liabilities | 9,449 | 0 | 9,449 | (1,820) | 0 | 7,629 |
31\u00a0December 2021 | ||||||
Financial asset | 802 | 0 | 802 | (788) | 0 | 14 |
Financial liabilities | 4,156 | 0 | 4,156 | (788) | 0 | 3,368 |
The contract or notional amounts of derivative financial instruments shown below do not necessarily represent amounts exchanged by the parties and, thus, are not necessarily a measure for the exposure of the Company through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, specified by year of expected maturity:
(In \u20ac million) | Remaining period | Total | |||||
|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | > 5 years | ||
31\u00a0December 2022 | |||||||
Net forward and swap contracts | 20,076 | 18,636 | 12,128 | 8,100 | 7,284 | 1,201 | 67,425 |
31\u00a0December 2021 | |||||||
Net forward sales contracts | 21,225 | 17,923 | 17,102 | 10,899 | 8,161 | 7,233 | 82,543 |
The following table sets out the notional amount of foreign exchange hedges in place as of 31\u00a0December 2022 relating to the commercial activities of Airbus, and the average euro converted rates applicable to corresponding EBIT.
(In $ million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 22,737 | 21,274 | 13,772 | 9,138 | 9,467 | 76,388 |
Forward rates | ||||||
\u20ac/US$ | 1.21 | 1.23 | 1.24 | 1.30 | 1.30 | 1.24 |
In 2022 new hedge contracts of US$ 7.5\u00a0billion (2021: US$ 29.5\u00a0billion) were added at an average rate of 1.12 US$/\u20ac\u2009 (2021: 1.21 US$/\u20ac).
As of 31\u00a0December 2022, the total hedge portfolio with maturities up to 2029 amounts to US$ 76.4\u00a0billion (2021: US$ 88.3\u00a0billion) and covers a major portion of the foreign exchange exposure expected over the hedging horizon. The average US$/\u20ac hedge rate of the US$/\u20ac hedge portfolio until 2029 amounts to 1.24 US$/\u20ac\u2009(2021: 1.25 US$/\u20ac).
(In \u00a3 million) | 2023 | 2024 | 2025 | 2026 | 2027+ | Total |
|---|---|---|---|---|---|---|
Total hedges | 852 | 789 | 537 | 333 | 311 | 2,822 |
Forward rates | ||||||
\u20ac/\u00a3 | 0.88 | 0.89 | 0.90 | 0.91 | 0.93 | 0.89 |
Since 2021, \u20ac/\u00a3 hedges were implemented in order to cover the GBP exposure of the Company.
The notional amounts of interest rate contracts are as follows:
(In \u20ac million) | Remaining period | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | 5 years | 6 years | 7 years | > 7 years | ||
31\u00a0December 2022 | |||||||||
Interest rate contracts | 0 | 823 | 561 | 1,355 | 1,406 | 611 | 500 | 4,150 | 9,406 |
31\u00a0December 2021 | |||||||||
Interest rate contracts | 12 | 0 | 1,000 | 750 | 1,850 | 1,324 | 750 | 4,650 | 10,336 |
Please also refer to \u201c\u2013 Note\u00a037.3: Financing Liabilities\u201d.
The notional amounts of commodity contracts are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 13 | 4 | 0 | 0 | 0 | 17 |
31\u00a0December 2021 | 20 | 21 | 3 | 0 | 0 | 44 |
The notional amounts of equity swaps are as follows:
(In \u20ac million) | Remaining period | Total | ||||
|---|---|---|---|---|---|---|
1 year | 2 years | 3 years | 4 years | > 4 years | ||
31\u00a0December 2022 | 17 | 22 | 14 | 0 | 0 | 53 |
31\u00a0December 2021 | 18 | 17 | 18 | 10 | 0 | 63 |
The following table presents the reconciliation of AOCI, net of tax, resulting from cash flow hedge accounting as of 31\u00a0December 2022 and 31\u00a0December 2021:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Hedge reserve | ||
Opening balance | 3,448 | (262) |
Foreign exchange contracts | 5,575 | 5,279 |
Others | 34 | 12 |
Changes in fair values | 5,609 | 5,291 |
Foreign exchange contracts | (2,358) | (64) |
Others | (7) | (3) |
Amount reclassified to profit or loss (matured hedges) | (2,365) | (67) |
Foreign exchange contracts | (146) | (106) |
Others | (1) | 1 |
Amount classified to profit or loss (inefficiency) | (147) | (105) |
Tax impact | (857) | (1,409) |
Closing balance | 5,688 | 3,448 |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2022:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 1,492 | (7,643) | 4,429 | 1,146 | (146) | (2,358) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 0 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (60) | 36 | 0 | 0 | (7) |
Interest rate risk | 0 | 0 | 0 | 0 | 0 | 0 |
Commodity swap risk | 6 | 0 | (2) | 0 | (1) | 0 |
Equity swap risk | 1 | (4) | 0 | 0 | 0 | 0 |
Total | 1,499 | (7,707) | 4,463 | 1,146 | (147) | (2,365) |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2021:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 637 | (4,092) | 5,349 | (72) | (106) | (64) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 2 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (40) | 30 | 0 | 0 | (3) |
Interest rate risk | 0 | (1) | 0 | 0 | 0 | 0 |
Commodity swap risk | 7 | (3) | (12) | 0 | 1 | 0 |
Equity swap risk | 3 | (5) | (6) | 0 | 0 | 0 |
Total | 647 | (4,141) | 5,361 | (70) | (105) | (67) |
The Company\u2019s net gains or net losses recognised in profit or loss in 2022 and 2021, respectively, are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets or financial liabilities at fair value through profit or loss | ||
Held for trading | 497 | 404 |
Designated on initial recognition | 95 | 188 |
Financial assets at amortised cost | (232) | 283 |
Financial assets at fair value through OCI (previously available-for-sale) | 55 | 20 |
Financial liabilities measured at amortised cost | (75) | (700) |
Net losses of \u20ac\u2009-1,169\u00a0million (2021: \u20ac\u2009-218\u00a0million) are recognised directly in equity relating to financial assets at fair value.
Interest income from financial assets or financial liabilities through profit or loss is included in net gains or losses.
Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.
The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.
Investment grade instruments \u2014 The Company considers a significant increase in credit risk to have occurred, if there is a downgrade by four notches such that the instrument moves into a high yield bucket as a direct result of the downgrade. With respect to instruments that were high yield at initial recognition, a downgrade by four notches is considered as a significant increase in credit risk.
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2022 | 12.08 | 20.74 | 18.77 | 51.59 |
Change in financial assets | 3.82 | (5.44) | (1.47) | (3.09) |
Change in risk parameters | 1.32 | (6.95) | 9.41 | 3.78 |
At 31\u00a0December 2022 | 17.22 | 8.35 | 26.71 | 52.28 |
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | 8.09 | 18.26 | 23.42 | 49.77 |
Change in financial assets | 1.91 | (2.17) | (1.77) | (2.03) |
Change in risk parameters | 2.08 | 4.65 | (2.88) | 3.85 |
At 31\u00a0December 2021 | 12.08 | 20.74 | 18.77 | 51.59 |
The following table breaks down the gross carrying amount of loans and receivables as of 31\u00a0December 2022 and 2021, separately showing those that are impaired, renegotiated or past due:
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||||
Trade receivables | 3,727 | 0 | 376 | 373 | 147 | 132 | 99 | 479 | (380) | 4,953 |
Contract assets | 1,528 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1) | 1,527 |
Others | 2,552 | 2 | 93 | 131 | 391 | 116 | 7 | 452 | (188) | 3,556 |
Total | 7,807 | 2 | 469 | 504 | 538 | 248 | 106 | 931 | (569) | 10,036 |
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2021 | ||||||||||
Trade receivables\u00a0(1) | 3,686 | 3 | 356 | 485 | 124 | 207 | 64 | 393 | (361) | 4,957 |
Contract assets | 1,406 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (2) | 1,404 |
Others | 2,301 | 3 | 248 | 68 | 122 | 12 | 29 | 464 | (187) | 3,060 |
Total | 7,393 | 6 | 604 | 553 | 246 | 219 | 93 | 857 | (550) | 9,421 |
(1) 2021 figures restated in accordance with 2022 presentation. |
The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour and analysis of customer credit risk, including underlying customers\u2019 credit ratings if they are available.
The following impairment losses on financial assets are recognised in profit or loss in 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Trade receivables | (65) | (83) |
Contract assets | 0 | (1) |
Total | (65) | (84) |
Hedge accounting \u2014 Most of the Company\u2019s revenue is denominated in US dollar (\u201cUS$\u201d), while a major portion of its costs are incurred in euro. The Company is significantly exposed to the risk of currency changes, mainly resulting from US$/\u20ac exchange rates. Furthermore, the Company is exposed, though to a much lesser extent, to foreign exchange risk arising from costs incurred in currencies other than the euro and to other market risks such as interest rate risk, commodity price and equity price risk.
In order to manage and mitigate those risks, the Company enters into derivative contracts. The Company applies hedge accounting to its derivative contracts whenever the relevant IFRS criteria can be met. Hedge accounting ensures that derivative gains or losses are recognised in profit or loss (mainly in revenue) in the same period that the hedged items or transactions affect profit or loss.
The major portion of the Company\u2019s derivative contracts is accounted for under the cash flow hedge model. The fair value hedge model is used only for certain interest rate derivatives. Derivative contracts which do not qualify for hedge accounting are accounted for at fair value through profit or loss; any related gains or losses being recognised in financial result.
The Company\u2019s hedging strategies and hedge accounting policies are described in more detail in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.The following table presents the reconciliation of AOCI, net of tax, resulting from cash flow hedge accounting as of 31\u00a0December 2022 and 31\u00a0December 2021:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Hedge reserve | ||
Opening balance | 3,448 | (262) |
Foreign exchange contracts | 5,575 | 5,279 |
Others | 34 | 12 |
Changes in fair values | 5,609 | 5,291 |
Foreign exchange contracts | (2,358) | (64) |
Others | (7) | (3) |
Amount reclassified to profit or loss (matured hedges) | (2,365) | (67) |
Foreign exchange contracts | (146) | (106) |
Others | (1) | 1 |
Amount classified to profit or loss (inefficiency) | (147) | (105) |
Tax impact | (857) | (1,409) |
Closing balance | 5,688 | 3,448 |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2022:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 1,492 | (7,643) | 4,429 | 1,146 | (146) | (2,358) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 0 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (60) | 36 | 0 | 0 | (7) |
Interest rate risk | 0 | 0 | 0 | 0 | 0 | 0 |
Commodity swap risk | 6 | 0 | (2) | 0 | (1) | 0 |
Equity swap risk | 1 | (4) | 0 | 0 | 0 | 0 |
Total | 1,499 | (7,707) | 4,463 | 1,146 | (147) | (2,365) |
The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for cash-flow hedges as of 31\u00a0December 2021:
(In \u20ac million) | Carrying values | OCI | Hedge inefficiency recorded in financial result | Amounts reclassified from hedge reserve to profit or loss | ||
|---|---|---|---|---|---|---|
Asset | Liability | Changes in values of the hedging instrument | Other changes in value of the hedge reserve | |||
Foreign currency risk | ||||||
\u00a0Net forward sales contracts | 637 | (4,092) | 5,349 | (72) | (106) | (64) |
\u00a0Foreign exchange options | 0 | 0 | 0 | 2 | 0 | 0 |
\u00a0Embedded Derivatives | 0 | (40) | 30 | 0 | 0 | (3) |
Interest rate risk | 0 | (1) | 0 | 0 | 0 | 0 |
Commodity swap risk | 7 | (3) | (12) | 0 | 1 | 0 |
Equity swap risk | 3 | (5) | (6) | 0 | 0 | 0 |
Total | 647 | (4,141) | 5,361 | (70) | (105) | (67) |
The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:
Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.
Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.
The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).
Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.
Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).
Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).
Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).
Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.
Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.
The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).
Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-18": { "value": "The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:
Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.
Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.
The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).
Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).
In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.
Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).
Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).
Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).
Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.
Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.
The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).
Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-19": { "value": "The preparation of the Company\u2019s Consolidated Financial Statements requires the use of estimates and assumptions. In preparing these Financial Statements, management exercises its best judgement based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial period presented and are reviewed on an ongoing basis. Key estimates and judgements that have a significant in\ufb02uence on the amounts recognised in the Company\u2019s Consolidated Financial Statements are mentioned below:Impairment of long-life assets, work in progress and finished aircraft \u2014 In testing long-life assets such as jigs and tools and capitalised development costs for impairment, the Company makes estimates on the number and timing of aircraft units to be delivered in the future, the margin of these aircraft, and the discount rate associated with the aircraft programme.\u00a0For aircraft that may need to be remarketed, the impairment of working progress and finished aircraft is assessed based on an estimation of the future selling price and associated remarketing costs.Revenue recognition for performance obligations transferred over time \u2014 The PoC method is used to recognise revenue for performance obligations transferred over time. This method places considerable importance on accurate estimates at completion as well as on the extent of progress towards completion. For the determination of the progress of the performance obligations, significant estimates include total contract costs, remaining costs to completion, total contract revenue, contract risks and other judgements.The management of the segments continually review all estimates involved in such performance obligations and adjusts them as necessary (see \u201c\u2013 Note\u00a023: Contract Assets and Contract Liabilities, Trade Receivables and Trade Liabilities\u201d).Provisions \u2014 The evaluation of provisions, such as onerous contracts, program-related provisions and restructuring measures are based on best estimates. Onerous contracts are identified by monitoring the progress of the contract and the underlying programme performance. The associated estimates of the relevant contract costs require significant judgement related to performance achievements. Depending on the size and nature of the Company\u2019s contracts and related programmes, the extent of assumptions, judgements and estimates in these monitoring processes differs. In particular, the introduction of commercial or military aircraft programmes (e.g. A400M) or major derivative aircraft programmes involves an increased level of estimates and judgements associated with the expected development, production and certification schedules and expected cost components (see \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d).In view of overall commercial relationships, contract adjustments may occur, and must be considered on a case by case basis.Estimates and judgements are subject to change based on new information as contracts and related programmes progress. Furthermore, the complex design and manufacturing processes of the Company\u2019s industry require challenging integration and coordination along the supply chain including an ongoing assessment of suppliers\u2019 assertions which may additionally impact the outcome of these monitoring processes.A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision is at the best estimate of the anticipated costs and includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.Non-current assets\u00a0\u2014\u00a0Non-current other assets include payments to be made to Airbus by suppliers after aircraft delivery and are recorded as a reduction of cost of goods sold at the time of aircraft delivery. This valuation involves the use of judgment and is based on the best available estimate of the future aircraft operations, the pattern of future maintenance activity and escalation of costs of long-term contractual arrangement with suppliers. The impact of climate change is also considered when making these estimates.\u00a0These future payments are discounted to reflect specific contractual terms and repayment profile. In making such estimates, Airbus relies on both management experience and industry regulations, however, these estimates can be subject to revision (see - \u201cNote\u00a027: Other Assets and Other Liabilities\u201d).Hedge accounting \u2014 The hedge portfolio covers a large portion of the Company\u2019s highly probable forecasted transactions derived from its commercial activities. The Company makes estimates and judgement in assessing the highly probable criteria of the forecasted transactions, in order to anticipate future events, as risk of future cancellations of orders (see \u201c\u2013 Note\u00a038: Financial Instruments\u201d).Employee benefits \u2014 The Company accounts for pension and other post-retirement benefits in accordance with actuarial valuations. These valuations rely on statistical and other factors in order to anticipate future events. The actuarial assumptions may differ materially from actual developments mainly due to changing market and economic conditions and therefore result in a significant change in post-retirement employee benefit obligations and the related future expenses (see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d).Legal contingencies \u2014 The Company is party to litigations related to a number of matters as described in \u201c\u2013 Note\u00a039: Litigation and Claims\u201d. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows of the Company. Management regularly analyses current information concerning these matters and provides provisions for probable cash outflows, including the estimate of legal expenses to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Airbus companies or the disclosure of any such suit or assertion, does not automatically indicate that a provision may be appropriate.Income taxes \u2014 The Company operates and earns income in numerous countries and is subject to changing tax laws in multiple jurisdictions within these countries. Significant judgements are necessary in determining the worldwide income tax liabilities. Although management believes that it has made reasonable estimates about the final outcome of tax uncertainties, no assurance can be given that the final tax outcome of these matters will be consistent with what is reflected in the historical income tax provisions. At each end of the reporting period, the Company assesses whether the realisation of future tax benefits is probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors.The recorded amount of total deferred tax assets could be reduced, through valuation allowances recognition, if estimates of projected future taxable income and benefits from available tax strategies are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company\u2019s ability to utilise future tax benefits. The basis for the recoverability test of deferred tax assets is the same as the Company\u2019s latest operative planning also taking into account certain qualitative aspects regarding the nature of the temporary differences. Qualitative factors include but are not limited to an entity\u2019s history of planning accuracy, performance records, business model, backlog, existence of long-term contracts as well as the nature of temporary differences (see \u201c\u2013 Note\u00a018: Income Taxes\u201d).Other subjects that involve assumptions and estimates are further described in the respective notes (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d, \u201c\u2013 Note\u00a020: Intangible Assets\u201d and \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-70": { "value": "The accounting policies applied by the Company in preparation of its 2022\u00a0year-end Consolidated Financial Statements are the same as applied for the previous year. Other than that, amendments, improvements to and interpretations of standards effective from 1\u00a0January 2022 have no material impact on the Consolidated Financial Statements.
In April\u00a02021, IFRS\u00a0IC published an agenda decision, \u201cConfiguration or Customisation Costs in a Cloud Computing Arrangement\u201d, which considered how an entity should account for configuration and customisation costs incurred in implementing these service arrangements.
IFRS\u00a0IC concluded that these costs should be expensed, unless the criteria for recognising a separate asset are met. The Company did not perform significant configuration or customisation on its software-as-a-service contracts. As a consequence, the IFRS\u00a0IC decision has no significant impact on the Consolidated Financial Statements as of 31\u00a0December 2022.
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31\u00a0December 2022 and have not been applied in preparing these Consolidated Financial Statements and early adoption is not planned:
Standards and related amendments | IASB effective date | Endorsement |
|---|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Presentation of Financial Statements and IFRS Practice\u00a0 | 1\u00a0January 2023 | Endorsed |
Amendments to IAS 8:\u00a0 Definition of Accounting Estimates | 1 January 2023 | Endorsed |
Amendments to IAS\u00a012: Deferred Tax related to Assets and Liabilities arising from a Single Transaction | 1\u00a0January 2023 | Endorsed |
Amendments to IFRS\u00a017: Initial Application of IFRS\u00a017 and IFRS\u00a09 \u2013 Comparative Information | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Classification of Liabilities as Current or Non-current | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IAS\u00a01: Non-current Liabilities with Covenants | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IFRS\u00a016: Lease Liability in a Sale and Leaseback | 1\u00a0January 2024 | Not yet endorsed |
The accounting policies applied by the Company in preparation of its 2022\u00a0year-end Consolidated Financial Statements are the same as applied for the previous year. Other than that, amendments, improvements to and interpretations of standards effective from 1\u00a0January 2022 have no material impact on the Consolidated Financial Statements.
In April\u00a02021, IFRS\u00a0IC published an agenda decision, \u201cConfiguration or Customisation Costs in a Cloud Computing Arrangement\u201d, which considered how an entity should account for configuration and customisation costs incurred in implementing these service arrangements.
IFRS\u00a0IC concluded that these costs should be expensed, unless the criteria for recognising a separate asset are met. The Company did not perform significant configuration or customisation on its software-as-a-service contracts. As a consequence, the IFRS\u00a0IC decision has no significant impact on the Consolidated Financial Statements as of 31\u00a0December 2022.
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31\u00a0December 2022 and have not been applied in preparing these Consolidated Financial Statements and early adoption is not planned:
Standards and related amendments | IASB effective date | Endorsement |
|---|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Presentation of Financial Statements and IFRS Practice\u00a0 | 1\u00a0January 2023 | Endorsed |
Amendments to IAS 8:\u00a0 Definition of Accounting Estimates | 1 January 2023 | Endorsed |
Amendments to IAS\u00a012: Deferred Tax related to Assets and Liabilities arising from a Single Transaction | 1\u00a0January 2023 | Endorsed |
Amendments to IFRS\u00a017: Initial Application of IFRS\u00a017 and IFRS\u00a09 \u2013 Comparative Information | 1\u00a0January 2023 | Endorsed |
Amendments to IAS\u00a01: Classification of Liabilities as Current or Non-current | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IAS\u00a01: Non-current Liabilities with Covenants | 1\u00a0January 2024 | Not yet endorsed |
Amendments to IFRS\u00a016: Lease Liability in a Sale and Leaseback | 1\u00a0January 2024 | Not yet endorsed |
Consolidation \u2014 The Company\u2019s Consolidated Financial Statements include the Financial Statements of Airbus\u00a0SE and all material subsidiaries controlled by the Company. The Company\u2019s subsidiaries prepare their Financial Statements at the same reporting date as the Company\u2019s Consolidated Financial Statements (see Appendix \u201cSimplified Airbus Structure\u201d chart).
Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.
The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.
(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Investments in joint ventures | 1,686 | 1,471 |
Investments in associates | 381 | 201 |
Total | 2,067 | 1,672 |
Investments accounted for under the equity method increased by \u20ac\u2009+395\u00a0million to \u20ac\u20092,067\u00a0million (2021: \u20ac\u20091,672\u00a0million). They mainly include the equity investments in ArianeGroup, MBDA and ATR GIE.
The joint ventures in which the Company holds an interest are structured in separate incorporated companies. Under joint arrangement agreements, unanimous consent is required from all parties to the agreement for all relevant activities. The Company and its partners have rights to the net assets of these entities through the terms of the contractual agreements.
The Company\u2019s interest in its joint ventures, accounted for under the equity method, is stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investments at 1\u00a0January | 1,471 | 1,367 |
New joint ventures | 0 | 49 |
Share of results from continuing operations | 99 | 73 |
Share of other comprehensive income | 173 | 116 |
Dividends received during the year | (99) | (70) |
Capital increase (decrease) | 36 | 76 |
Changes in consolidation | 0 | (28) |
Others | 6 | (112) |
Carrying amount of the investments at 31\u00a0December | 1,686 | 1,471 |
The Company\u2019s individually material joint ventures are ArianeGroup, Paris (France), MBDA\u00a0S.A.S., Paris (France), and ATR GIE, Blagnac (France), as parent companies of their respective groups. These joint venture companies are not publicly listed.
ArianeGroup is a 50% joint venture between the Company and Safran. ArianeGroup is the head company in a group comprising several subsidiaries and affiliates, such as: APP, Arianespace, Eurocryospace, Europropulsion, Nucl\u00e9tudes, Pyroalliance, Regulus and Sodern. ArianeGroup inherits a rich portfolio of products and services, enabling it to deliver innovative and competitive solutions to numerous customers around the world. In 2022, ArianeGroup has been strongly impacted by the Ukraine crisis. All Soyuz flights operated by Arianespace and Starsem have been canceled since 24 February 2022 (see \u201c\u2013 Note 2: Ukraine Crisis\u201d). In addition, ArianeGroup has announced the postponement of the inaugural flight of the Ariane 6 launcher to the end of 2023.
The Company holds a 37.5% stake in MBDA at 31\u00a0December 2022, which is a joint venture between the Company, BAE Systems and Leonardo. MBDA offers missile systems capabilities that cover the whole range of solutions for air dominance, ground-based air defence and maritime superiority, as well as advanced technological solutions for battlefield engagement.
ATR GIE manufactures advanced turboprop aircraft. It is a 50% joint venture between Leonardo and the Company. Both Leonardo and the Company provide airframes which are assembled by ATR GIE in France. The members of ATR GIE are legally entitled exclusively to the benefits and are liable for the commitments of the joint venture. ATR GIE is obliged to transfer its cash to each member of the joint venture.\u00a0
The following table summarises financial information for ArianeGroup, MBDA and ATR GIE based on their Consolidated Financial Statements prepared in accordance with IFRS:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Revenue | 2,357 | 3,129 | 4,210 | 4,234 | 852 | 707 |
Depreciation and amortisation | (153) | (157) | (199) | (165) | 3 | 21 |
Interest income | 2 | 1 | 39 | 8 | 0 | 0 |
Interest expense | (23) | (12) | (25) | (13) | 0 | 0 |
Income tax expense | (19) | 40 | (123) | (112) | (2) | 0 |
Profit (loss) from continuing operations | 19 | (39) | 386 | 344 | (11) | (48) |
Other comprehensive income | 70 | 15 | 316 | 266 | 0 | 0 |
Total comprehensive income (100%) | 89 | (24) | 702 | 610 | (11) | (48) |
Non-current assets | 6,086 | 6,129 | 2,748 | 2,727 | 239 | 267 |
Current assets | 6,841 | 6,466 | 8,160 | 7,849 | 785 | 720 |
thereof cash and cash equivalents | 1,409 | 1,223 | 2,987 | 2,819 | 4 | 6 |
Non-current liabilities | 909 | 1,008 | 206 | 766 | 75 | 203 |
thereof non-current financial liabilities | 358 | 423 | 11 | 6 | 0 | 0 |
Current liabilities | 7,790 | 7,451 | 9,171 | 8,733 | 748 | 662 |
thereof current financial liabilities | 59 | 129 | 22 | 21 | 0 | 0 |
Total equity (100%) | 4,228 | 4,136 | 1,531 | 1,077 | 201 | 122 |
Equity attributable to the equity owners of the parent | 4,230 | 4,126 | 1,531 | 1,077 | 201 | 122 |
Non-controlling interests | (2) | 10 | 0 | 0 | 0 | 0 |
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
The Company\u2019s interest in equity on investee | 2,115 | 2,063 | 575 | 404 | 100 | 61 |
Goodwill | 244 | 244 | 282 | 282 | 0 | 0 |
PPA adjustments, net of tax | (1,709) | (1,640) | 0 | 0 | 0 | 0 |
Contingent liability release adjustment | (36) | (36) | 0 | 0 | 0 | 0 |
Fair value adjustments and modifications for differences in accounting policies | (93) | (101) | (10) | (10) | 0 | 0 |
Elimination of downstream inventory | 2 | 2 | 0 | 0 | (4) | (5) |
Other | 0 | 0 | 0 | 0 | (3) | 3 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The development of these investments is as follows:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Carrying amount of the investment at 1\u00a0January | 532 | 669 | 676 | 498 | 59 | 10 |
Share of results from continuing operations | (47) | (66) | 146 | 130 | (5) | (23) |
Share of other comprehensive income | 38 | 5 | 117 | 99 | 8 | (4) |
Dividends received during the year | 0 | 0 | (92) | (49) | 0 | 0 |
Capital increase (decrease) | 0 | 0 | 0 | 0 | 36 | 76 |
Changes in consolidation | 0 | 5 | 0 | 0 | 0 | 0 |
Others | 0 | (81) | 0 | (2) | (5) | 0 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The Company\u2019s share of contingent liabilities and other commitments as of 31\u00a0December 2022 relating to MBDA is \u20ac\u2009500\u00a0million (2021: \u20ac\u2009393\u00a0million).
The Company\u2019s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investment at 1\u00a0January | 201 | 211 |
Share of results from continuing operations | 35 | (33) |
Share of other comprehensive income | 138 | 30 |
Dividends received during the year | (1) | (6) |
Changes in consolidation | 6 | 0 |
Others | 2 | (1) |
Carrying amount of the investment at 31\u00a0December | 381 | 201 |
The cumulative unrecognised comprehensive loss for these associates amounts to \u20ac\u20090\u00a0million and \u20ac\u2009-12\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Share of profit from investments in joint ventures | 99 | 73 |
Share of profit from investments in associates | 35 | (33) |
Share of profit from investments accounted for under the equity method | 134 | 40 |
Other income from investments | 58 | 76 |
Share of profit from investments under the equity method and other income from investments increased by \u20ac\u200976\u00a0million to \u20ac\u2009192\u00a0million compared to \u20ac\u2009116\u00a0million in 2021, mainly linked to higher share of result from equity investments, partly offset by the dividends received in 2021 from other investments classified at fair value through OCI.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Other investments | 2,641 | 2,511 |
Other long-term financial assets | 1,549 | 1,490 |
Total non-current other investments and other long-term financial assets | 4,190 | 4,001 |
Current portion of other long-term financial assets | 665 | 537 |
Total | 4,855 | 4,538 |
Other investments mainly comprise the Company\u2019s participations and include the remaining investment in Dassault Aviation (9.90%, 2021: 9.90%) amounting to \u20ac\u20091,309\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u2009786\u00a0million). It is partly offset by the decrease in fair value of other investments.
Other long-term financial assets and the current portion of other long-term financial assets include other loans in the amount of \u20ac\u20092,129\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,909\u00a0million), and the sales financing activities in the form of finance lease receivables and loans from aircraft financing.Subsidiaries are entities controlled by the Company including so-called structured entities, which are created to accomplish a narrow and well-defined objective. They are fully consolidated from the date control commences to the date control ceases.
The assessment of control of a structured entity is performed in three steps. In a first step, the Company identifies the relevant activities of the structured entities (which may include managing lease receivables, managing the sale or re-lease at the end of the lease and managing the sale or re-lease on default) and in a second step, the Company assesses which activity is expected to have the most significant impact on the structured entities\u2019 return. Finally, the Company determines which party or parties control this activity.Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3664": { "value": "The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3665": { "value": "The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-90": { "value": "The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.The Company\u2019s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investment at 1\u00a0January | 201 | 211 |
Share of results from continuing operations | 35 | (33) |
Share of other comprehensive income | 138 | 30 |
Dividends received during the year | (1) | (6) |
Changes in consolidation | 6 | 0 |
Others | 2 | (1) |
Carrying amount of the investment at 31\u00a0December | 381 | 201 |
The cumulative unrecognised comprehensive loss for these associates amounts to \u20ac\u20090\u00a0million and \u20ac\u2009-12\u00a0million as of 31\u00a0December 2022 and 2021, respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-88": { "value": "
The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.The joint ventures in which the Company holds an interest are structured in separate incorporated companies. Under joint arrangement agreements, unanimous consent is required from all parties to the agreement for all relevant activities. The Company and its partners have rights to the net assets of these entities through the terms of the contractual agreements.
The Company\u2019s interest in its joint ventures, accounted for under the equity method, is stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investments at 1\u00a0January | 1,471 | 1,367 |
New joint ventures | 0 | 49 |
Share of results from continuing operations | 99 | 73 |
Share of other comprehensive income | 173 | 116 |
Dividends received during the year | (99) | (70) |
Capital increase (decrease) | 36 | 76 |
Changes in consolidation | 0 | (28) |
Others | 6 | (112) |
Carrying amount of the investments at 31\u00a0December | 1,686 | 1,471 |
The Company\u2019s individually material joint ventures are ArianeGroup, Paris (France), MBDA\u00a0S.A.S., Paris (France), and ATR GIE, Blagnac (France), as parent companies of their respective groups. These joint venture companies are not publicly listed.
ArianeGroup is a 50% joint venture between the Company and Safran. ArianeGroup is the head company in a group comprising several subsidiaries and affiliates, such as: APP, Arianespace, Eurocryospace, Europropulsion, Nucl\u00e9tudes, Pyroalliance, Regulus and Sodern. ArianeGroup inherits a rich portfolio of products and services, enabling it to deliver innovative and competitive solutions to numerous customers around the world. In 2022, ArianeGroup has been strongly impacted by the Ukraine crisis. All Soyuz flights operated by Arianespace and Starsem have been canceled since 24 February 2022 (see \u201c\u2013 Note 2: Ukraine Crisis\u201d). In addition, ArianeGroup has announced the postponement of the inaugural flight of the Ariane 6 launcher to the end of 2023.
The Company holds a 37.5% stake in MBDA at 31\u00a0December 2022, which is a joint venture between the Company, BAE Systems and Leonardo. MBDA offers missile systems capabilities that cover the whole range of solutions for air dominance, ground-based air defence and maritime superiority, as well as advanced technological solutions for battlefield engagement.
ATR GIE manufactures advanced turboprop aircraft. It is a 50% joint venture between Leonardo and the Company. Both Leonardo and the Company provide airframes which are assembled by ATR GIE in France. The members of ATR GIE are legally entitled exclusively to the benefits and are liable for the commitments of the joint venture. ATR GIE is obliged to transfer its cash to each member of the joint venture.\u00a0
The following table summarises financial information for ArianeGroup, MBDA and ATR GIE based on their Consolidated Financial Statements prepared in accordance with IFRS:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Revenue | 2,357 | 3,129 | 4,210 | 4,234 | 852 | 707 |
Depreciation and amortisation | (153) | (157) | (199) | (165) | 3 | 21 |
Interest income | 2 | 1 | 39 | 8 | 0 | 0 |
Interest expense | (23) | (12) | (25) | (13) | 0 | 0 |
Income tax expense | (19) | 40 | (123) | (112) | (2) | 0 |
Profit (loss) from continuing operations | 19 | (39) | 386 | 344 | (11) | (48) |
Other comprehensive income | 70 | 15 | 316 | 266 | 0 | 0 |
Total comprehensive income (100%) | 89 | (24) | 702 | 610 | (11) | (48) |
Non-current assets | 6,086 | 6,129 | 2,748 | 2,727 | 239 | 267 |
Current assets | 6,841 | 6,466 | 8,160 | 7,849 | 785 | 720 |
thereof cash and cash equivalents | 1,409 | 1,223 | 2,987 | 2,819 | 4 | 6 |
Non-current liabilities | 909 | 1,008 | 206 | 766 | 75 | 203 |
thereof non-current financial liabilities | 358 | 423 | 11 | 6 | 0 | 0 |
Current liabilities | 7,790 | 7,451 | 9,171 | 8,733 | 748 | 662 |
thereof current financial liabilities | 59 | 129 | 22 | 21 | 0 | 0 |
Total equity (100%) | 4,228 | 4,136 | 1,531 | 1,077 | 201 | 122 |
Equity attributable to the equity owners of the parent | 4,230 | 4,126 | 1,531 | 1,077 | 201 | 122 |
Non-controlling interests | (2) | 10 | 0 | 0 | 0 | 0 |
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
The Company\u2019s interest in equity on investee | 2,115 | 2,063 | 575 | 404 | 100 | 61 |
Goodwill | 244 | 244 | 282 | 282 | 0 | 0 |
PPA adjustments, net of tax | (1,709) | (1,640) | 0 | 0 | 0 | 0 |
Contingent liability release adjustment | (36) | (36) | 0 | 0 | 0 | 0 |
Fair value adjustments and modifications for differences in accounting policies | (93) | (101) | (10) | (10) | 0 | 0 |
Elimination of downstream inventory | 2 | 2 | 0 | 0 | (4) | (5) |
Other | 0 | 0 | 0 | 0 | (3) | 3 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The development of these investments is as follows:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Carrying amount of the investment at 1\u00a0January | 532 | 669 | 676 | 498 | 59 | 10 |
Share of results from continuing operations | (47) | (66) | 146 | 130 | (5) | (23) |
Share of other comprehensive income | 38 | 5 | 117 | 99 | 8 | (4) |
Dividends received during the year | 0 | 0 | (92) | (49) | 0 | 0 |
Capital increase (decrease) | 0 | 0 | 0 | 0 | 36 | 76 |
Changes in consolidation | 0 | 5 | 0 | 0 | 0 | 0 |
Others | 0 | (81) | 0 | (2) | (5) | 0 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The Company\u2019s share of contingent liabilities and other commitments as of 31\u00a0December 2022 relating to MBDA is \u20ac\u2009500\u00a0million (2021: \u20ac\u2009393\u00a0million).", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-87": { "value": "
The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Investments in joint ventures | 1,686 | 1,471 |
Investments in associates | 381 | 201 |
Total | 2,067 | 1,672 |
Investments accounted for under the equity method increased by \u20ac\u2009+395\u00a0million to \u20ac\u20092,067\u00a0million (2021: \u20ac\u20091,672\u00a0million). They mainly include the equity investments in ArianeGroup, MBDA and ATR GIE.
The joint ventures in which the Company holds an interest are structured in separate incorporated companies. Under joint arrangement agreements, unanimous consent is required from all parties to the agreement for all relevant activities. The Company and its partners have rights to the net assets of these entities through the terms of the contractual agreements.
The Company\u2019s interest in its joint ventures, accounted for under the equity method, is stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investments at 1\u00a0January | 1,471 | 1,367 |
New joint ventures | 0 | 49 |
Share of results from continuing operations | 99 | 73 |
Share of other comprehensive income | 173 | 116 |
Dividends received during the year | (99) | (70) |
Capital increase (decrease) | 36 | 76 |
Changes in consolidation | 0 | (28) |
Others | 6 | (112) |
Carrying amount of the investments at 31\u00a0December | 1,686 | 1,471 |
The Company\u2019s individually material joint ventures are ArianeGroup, Paris (France), MBDA\u00a0S.A.S., Paris (France), and ATR GIE, Blagnac (France), as parent companies of their respective groups. These joint venture companies are not publicly listed.
ArianeGroup is a 50% joint venture between the Company and Safran. ArianeGroup is the head company in a group comprising several subsidiaries and affiliates, such as: APP, Arianespace, Eurocryospace, Europropulsion, Nucl\u00e9tudes, Pyroalliance, Regulus and Sodern. ArianeGroup inherits a rich portfolio of products and services, enabling it to deliver innovative and competitive solutions to numerous customers around the world. In 2022, ArianeGroup has been strongly impacted by the Ukraine crisis. All Soyuz flights operated by Arianespace and Starsem have been canceled since 24 February 2022 (see \u201c\u2013 Note 2: Ukraine Crisis\u201d). In addition, ArianeGroup has announced the postponement of the inaugural flight of the Ariane 6 launcher to the end of 2023.
The Company holds a 37.5% stake in MBDA at 31\u00a0December 2022, which is a joint venture between the Company, BAE Systems and Leonardo. MBDA offers missile systems capabilities that cover the whole range of solutions for air dominance, ground-based air defence and maritime superiority, as well as advanced technological solutions for battlefield engagement.
ATR GIE manufactures advanced turboprop aircraft. It is a 50% joint venture between Leonardo and the Company. Both Leonardo and the Company provide airframes which are assembled by ATR GIE in France. The members of ATR GIE are legally entitled exclusively to the benefits and are liable for the commitments of the joint venture. ATR GIE is obliged to transfer its cash to each member of the joint venture.\u00a0
The following table summarises financial information for ArianeGroup, MBDA and ATR GIE based on their Consolidated Financial Statements prepared in accordance with IFRS:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Revenue | 2,357 | 3,129 | 4,210 | 4,234 | 852 | 707 |
Depreciation and amortisation | (153) | (157) | (199) | (165) | 3 | 21 |
Interest income | 2 | 1 | 39 | 8 | 0 | 0 |
Interest expense | (23) | (12) | (25) | (13) | 0 | 0 |
Income tax expense | (19) | 40 | (123) | (112) | (2) | 0 |
Profit (loss) from continuing operations | 19 | (39) | 386 | 344 | (11) | (48) |
Other comprehensive income | 70 | 15 | 316 | 266 | 0 | 0 |
Total comprehensive income (100%) | 89 | (24) | 702 | 610 | (11) | (48) |
Non-current assets | 6,086 | 6,129 | 2,748 | 2,727 | 239 | 267 |
Current assets | 6,841 | 6,466 | 8,160 | 7,849 | 785 | 720 |
thereof cash and cash equivalents | 1,409 | 1,223 | 2,987 | 2,819 | 4 | 6 |
Non-current liabilities | 909 | 1,008 | 206 | 766 | 75 | 203 |
thereof non-current financial liabilities | 358 | 423 | 11 | 6 | 0 | 0 |
Current liabilities | 7,790 | 7,451 | 9,171 | 8,733 | 748 | 662 |
thereof current financial liabilities | 59 | 129 | 22 | 21 | 0 | 0 |
Total equity (100%) | 4,228 | 4,136 | 1,531 | 1,077 | 201 | 122 |
Equity attributable to the equity owners of the parent | 4,230 | 4,126 | 1,531 | 1,077 | 201 | 122 |
Non-controlling interests | (2) | 10 | 0 | 0 | 0 | 0 |
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
The Company\u2019s interest in equity on investee | 2,115 | 2,063 | 575 | 404 | 100 | 61 |
Goodwill | 244 | 244 | 282 | 282 | 0 | 0 |
PPA adjustments, net of tax | (1,709) | (1,640) | 0 | 0 | 0 | 0 |
Contingent liability release adjustment | (36) | (36) | 0 | 0 | 0 | 0 |
Fair value adjustments and modifications for differences in accounting policies | (93) | (101) | (10) | (10) | 0 | 0 |
Elimination of downstream inventory | 2 | 2 | 0 | 0 | (4) | (5) |
Other | 0 | 0 | 0 | 0 | (3) | 3 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The development of these investments is as follows:
(In \u20ac million) | ArianeGroup | MBDA | ATR GIE | |||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Carrying amount of the investment at 1\u00a0January | 532 | 669 | 676 | 498 | 59 | 10 |
Share of results from continuing operations | (47) | (66) | 146 | 130 | (5) | (23) |
Share of other comprehensive income | 38 | 5 | 117 | 99 | 8 | (4) |
Dividends received during the year | 0 | 0 | (92) | (49) | 0 | 0 |
Capital increase (decrease) | 0 | 0 | 0 | 0 | 36 | 76 |
Changes in consolidation | 0 | 5 | 0 | 0 | 0 | 0 |
Others | 0 | (81) | 0 | (2) | (5) | 0 |
Carrying amount of the investment at 31\u00a0December | 523 | 532 | 847 | 676 | 93 | 59 |
The Company\u2019s share of contingent liabilities and other commitments as of 31\u00a0December 2022 relating to MBDA is \u20ac\u2009500\u00a0million (2021: \u20ac\u2009393\u00a0million).
The Company\u2019s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Carrying amount of the investment at 1\u00a0January | 201 | 211 |
Share of results from continuing operations | 35 | (33) |
Share of other comprehensive income | 138 | 30 |
Dividends received during the year | (1) | (6) |
Changes in consolidation | 6 | 0 |
Others | 2 | (1) |
Carrying amount of the investment at 31\u00a0December | 381 | 201 |
The cumulative unrecognised comprehensive loss for these associates amounts to \u20ac\u20090\u00a0million and \u20ac\u2009-12\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Share of profit from investments in joint ventures | 99 | 73 |
Share of profit from investments in associates | 35 | (33) |
Share of profit from investments accounted for under the equity method | 134 | 40 |
Other income from investments | 58 | 76 |
Share of profit from investments under the equity method and other income from investments increased by \u20ac\u200976\u00a0million to \u20ac\u2009192\u00a0million compared to \u20ac\u2009116\u00a0million in 2021, mainly linked to higher share of result from equity investments, partly offset by the dividends received in 2021 from other investments classified at fair value through OCI.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-23": { "value": "
The Company\u2019s interests in equity-accounted investees comprise investments in associates and joint ventures. Such investments are accounted for under the equity method and are initially recognised at cost.
The Financial Statements of the Company\u2019s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Company.Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f3694": { "value": "(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
(Number of companies) | 31 December | |
|---|---|---|
2022 | 2021 | |
Fully consolidated entities | 179 | 178 |
Investments accounted for under the equity method | ||
in joint ventures | 53 | 57 |
in associates | 29 | 23 |
Total | 261 | 258 |
Business combinations are accounted for using the acquisition method, as at the acquisition date, which is the date on which control is transferred to the Company.
The determination of the fair value of the acquired assets and the assumed liabilities which are the basis for the measurement of goodwill requires key estimates. Land, buildings and equipment are usually independently appraised while marketable securities are valued at market prices. If intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company either consults with an independent external valuation expert or develops the fair value internally, using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows.
These evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied.
Loss of control, loss of joint control, loss of significant influence \u2014 Upon loss of control of a subsidiary, the assets and liabilities and any components of the Company\u2019s equity related to the subsidiary are derecognised. Any gain or loss arising from the loss of control is recognised within other income or other expenses in the Consolidated Income Statement. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss of control is highly probable are classified as assets and liabilities held for sale when the Company has received sufficient evidence that the loss of control will occur in the 12\u00a0months after the classification. These assets and liabilities are presented after elimination of intercompany transactions.
When the loss of significant influence or the loss of joint control of an investment accounted for under the equity method is highly probable and is expected to occur in the coming 12\u00a0months, this associate or joint venture is classified as an asset held for sale.
Sale of investment in an associate or joint venture \u2014 Any gain or loss arising from the disposal of investment accounted for under the equity method is recognised within share of profit from investments.
On 20\u00a0June 2022, a Share Purchase Agreement has been signed between a consortium composed of the Company, Safran and Tikehau ACE Capital, and Eramet for the acquisition of its subsidiary Aubert & Duval. The acquisition, which remains subject to certain conditions precedent including regulatory approvals, is expected to be completed in early 2023.
On 20\u00a0July 2022, Satair USA,\u00a0Inc. signed a Membership Interest Purchase Agreement under which it acquired 100% of the shares of VAS Aero Services,\u00a0LLC. VAS Aero Services provides aviation logistics and aftermarket services including end-of-life support. A preliminary goodwill of \u20ac\u200967\u00a0million is recognised as of 31\u00a0December 2022 and the one year window period for the completion of the purchase price allocation will end in June\u00a02023.
On 31\u00a0December 2022, Airbus Helicopters Deutschland\u00a0GmbH acquired\u00a0100% of the shares of ZF Luftfahrttechnik\u00a0GmbH. ZF Luftfahrttechnik was subsequently renamed Airbus Helicopters Technik\u00a0GmbH. The company is a manufacturer of dynamic components for light and medium helicopters and a maintenance, repair, and overhaul service partner for helicopter fleet. A preliminary goodwill of \u20ac\u200960\u00a0million is recognised as of 31\u00a0December 2022 and the one year window period for the completion of the purchase price allocation will end in December\u00a02023.", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-108": { "value": "Business combinations are accounted for using the acquisition method, as at the acquisition date, which is the date on which control is transferred to the Company.The determination of the fair value of the acquired assets and the assumed liabilities which are the basis for the measurement of goodwill requires key estimates. Land, buildings and equipment are usually independently appraised while marketable securities are valued at market prices. If intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company either consults with an independent external valuation expert or develops the fair value internally, using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows.
These evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied.Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-26": { "value": "Business combinations are accounted for using the acquisition method, as at the acquisition date, which is the date on which control is transferred to the Company.The determination of the fair value of the acquired assets and the assumed liabilities which are the basis for the measurement of goodwill requires key estimates. Land, buildings and equipment are usually independently appraised while marketable securities are valued at market prices. If intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company either consults with an independent external valuation expert or develops the fair value internally, using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows.
These evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-130": { "value": "The following table provides details on cash flows from disposals (resulting in assets and liabilities disposed) of subsidiaries, joint ventures and businesses:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Total selling price received by cash and cash equivalents | 0 | 310 |
Cash and cash equivalents included in the disposed subsidiaries | 0 | 0 |
Total | 0 | 310 |
In 2021, the aggregate cash flows from assets and disposals groups classified as held for sale resulted from the divestment of one of its sites in France.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-27": { "value": "
The following table provides details on cash flows from disposals (resulting in assets and liabilities disposed) of subsidiaries, joint ventures and businesses:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Total selling price received by cash and cash equivalents | 0 | 310 |
Cash and cash equivalents included in the disposed subsidiaries | 0 | 0 |
Total | 0 | 310 |
In 2021, the aggregate cash flows from assets and disposals groups classified as held for sale resulted from the divestment of one of its sites in France.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-31": { "value": "
(In \u20ac million) | Sales of goods and services and other income | Purchases of goods and services and other expenses | Receivables at | Liabilities at | Loans granted / Other receivables due at | Loans received / Other liabilities due at 31 December |
|---|---|---|---|---|---|---|
2022 | ||||||
Total transactions\u00a0 | 20 | 177 | 2 | (0) | 96 | 32 |
Total transactions\u00a0 | 3,073 | 206 | 1,273 | 1,199 | 2 | 1,692 |
2021 | ||||||
Total transactions\u00a0 | 7 | 132 | 3 | 22 | 108 | 0 |
Total transactions\u00a0 | 2,807 | 212 | 930 | 1,239 | 0 | 1,410 |
Transactions with unconsolidated subsidiaries are immaterial to the Company\u2019s Consolidated Financial Statements.
As of 31\u00a0December 2022, the Company granted guarantees of \u20ac\u2009129\u00a0million to Air Tanker Group in the UK (2021: \u20ac\u2009129\u00a0million) and \u20ac 225 million to NHIndustries in France (2021: \u20ac 225 million).
For information regarding the funding of the Company\u2019s pension plans, which are considered as related parties, see \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d.
The information relative to compensation and benefits granted to Members of the Executive Committee and Board of Directors are disclosed in \u201c\u2013 Note\u00a034: Remuneration\u201d.The Company\u2019s key management personnel consists of Members of the Executive Committee and Non-Executive Board Members. The Chief Executive Officer (\u201cCEO\u201d), who chairs the Executive Committee, is the sole Executive Board Member. The annual remuneration and related compensation costs of the key management personnel as expensed in the respective year can be summarised as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Executive Committee, including Executive Board Member | ||
Salaries and other short-term benefits (including bonuses) | 19.4 | 19.5 |
Post-employment benefit costs | 4.0 | 5.2 |
Share-based remuneration (\u201cLTIP award\u201d, including associated hedge result) | 4.1 | 3.4 |
Termination benefits\u00a0(1) | 0 | 6.1 |
Other benefits | 0.3 | 0.4 |
Social charges\u00a0(2) | 6.0 | 4.6 |
Non-Executive Board Members | ||
Short-term benefits (including social charges) | 2.3 | 2.0 |
Total expense recognised | 36.1 | 41.2 |
(1) 2021 Termination benefits include the termination benefits related to the year 2021. (2) Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. |
The amount of bonuses is based on estimated performance achievement as at the balance sheet date and difference between previous year estimation and actual pay-out in the current year. Outstanding short-term benefits (bonuses) at year-end 2022 for Executive Committee Members based on estimated performance achievement at year-end was \u20ac\u200910.2\u00a0million (2021: \u20ac\u200911.4\u00a0million).
In order to support the Company\u2019s target of reducing its Scope\u00a01 and 2 carbon emissions by 63% by 2030, the Board of Directors decided to translate this ambition into a concrete objective and include the CO2 reduction target in the collective variable remuneration of the CEO and all executives.
The post-employment and other long-term benefits defined obligation for the Executive Committee, including the CEO, amounted to \u20ac\u200916.7\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u200925.6\u00a0million). The disclosed post-employment and other long-term benefits reflect the total outstanding balance for all Executive Committee Members in charge at the end of the respective balance sheet date.
The share-based payment expenses result from not yet forfeited units and shares granted to the Executive Committee Members under the Company\u2019s LTIP which are re-measured at fair value according to the methodology described in Note\u00a033.
In 2022, the Members of the Executive Committee were granted 70,562 Performance Shares (2021: 66,575). For LTIP 2022, the respective fair value of these Shares at grant date was \u20ac\u20098.8\u00a0million (2021: \u20ac\u20096.5\u00a0million for both Performance Shares and Performance Units). As of 31\u00a0December 2022, provisions of \u20ac\u20095.4\u00a0million (2021: \u20ac\u20095.4\u00a0million) relating to LTIP have been recognised. The total number of outstanding Performance Units and Performance Shares granted to the current Members of the Executive Committee amounted to 81,183 and 206,211 respectively at 31\u00a0December 2022 (2021: 91,180 Performance Units and 152,967 Performance Shares).
The following benefits apply to Executive Committee Members, except the CEO.
In the case of contract termination, the Executive Committee Members are entitled to an indemnity equal to 1.5\u00a0times the Total Target Remuneration (defined as Base Salary and target Annual Variable Remuneration) with respect to applicable local legal requirements, if any.
This will not apply if the Executive Committee mandate is terminated for cause, in case of dismissal, if the Executive Committee Member resigns or has reached retirement age.
The Executive Committee Members\u2019 contract includes a non-compete clause which applies for a minimum of one year and can be extended at the Company\u2019s initiative for a further year. The Board of Directors has the discretion to waive or invoke the extension of the non-compete clause when legally or contractually possible. The compensation for each year that the non-compete clause applies is equal to 50% of the last Total Annual Remuneration (defined as Base Salary and Annual Variable Remuneration most recently paid) with respect to applicable local legal requirements, if any.
Past LTIP awards may be maintained in full or prorated, in such cases as in case of retirement or if a mandate is not renewed by the Company without cause, pro rata being based on the presence in the Company during performance periods. The vesting of past LTIP awards follows the plans\u2019 rules and regulations and is not accelerated in any case. LTIP awards are forfeited for Executives who leave the Company on their own initiative, but this is subject to review by the Board of Directors.
The termination benefits include assumptions about all effective, known or planned terminations to date.
Other benefits include expenses for Executive Committee Members\u2019 medical, death and disability coverage, company car and other usual facilities as applicable.
The annual remuneration and related compensation costs of the CEO as expensed in the respective year can be summarised as follows:
(In \u20ac) | 2022 | 2021 |
|---|---|---|
Base salary | 1,485,000 | 1,350,000 |
Annual variable pay | 2,008,800 | 22,247,750 |
Post-employment benefit costs | 1,385,222 | 1,138,794 |
Share-based remuneration (\u201cLTIP award\u201d)\u00a0(1) | 1,082,668 | 822,906 |
Termination benefits | 0 | 0 |
Other benefits | 32,734 | 32,479 |
Social charges\u00a0(2) | 1,357,922 | 1,089,385 |
(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment (see \u201c\u2013 Note\u00a033: Share-Based Payment\u201d). (2) Social charges depends on the applicable regulation to the CEO. In France, social charges comprise benefits accrued through mandatory collective and state plans such as pension, death and disability or medical coverage. |
The annual variable pay is based on estimated performance achievement as at the balance sheet date and difference between the previous year\u2019s estimation and actual pay-out in the current year.
Post-employment benefit costs relate to the aggregated amount of current service and interest costs for defined benefit plan and company cost for contributions base plans.
Following the Board decision approved in the AGM 2020, the CEO pension rights are accrued through a defined contributions plan from 1\u00a0January 2020, which coexists with the former defined benefit pension plan.
The accrued pension rights under the former defined benefit plan have been frozen at the end of 2019 and remain unvested until the retirement date of the CEO. The pension rights arising from the Company\u2019s defined contribution plan are deducted from the frozen defined pension rights.
As of 31\u00a0December 2022, the defined benefit obligation related to the frozen defined benefit commitment amounts to \u2009\u20ac\u20096,895,263 (2021: \u20ac\u20099,048,433). This obligation has been accrued in the 2022 Consolidated Financial Statements and will be updated annually up to the retirement date of the CEO considering additional service cost and future changes on economic assumptions or other factors like salary increase.
For the fiscal year 2022, the cost related to the CEO\u2019s pension rights accrued under Company\u2019s plans during the year represented an expense of \u20ac\u20091,385,222 (2021: \u20ac\u20091,138,794).
The annual cost of pension rights accrued under applicable mandatory collective and state pension plans are accounted for among social charges.
The table below gives an overview of the interests of the CEO, under the various LTIPs of the Company:
Granted Date | LTIP 2017 (1) | LTIP 2018 (1) | LTIP 2019 | LTIP 2020 | LTIP 2021 | LTIP 2022 |
|---|---|---|---|---|---|---|
Performance Units and Shares | 8,808 | 8,416 | 11,060 | 19,840 | 12,121 | 14,115 |
Revaluation | 50% | 50% | 50% | 100% | 100% | 100% |
Performance Units and Shares revalued | 4,404 | 4,208 | 5,531 | 19,840 | 12,121 | 14,115 |
Vested in 2022 | ||||||
in cash | 1,101 | 1,052 | 0 | 0 | 0 | 0 |
in shares | 0 | 2,104 | 0 | 0 | 0 | 0 |
Outstanding 2022 | ||||||
in cash | 0 | 1,052 | 2,766 | 9,920 | 0 | 0 |
in shares | 0 | 0 | 2,765 | 9,920 | 12,121 | 14,115 |
Vesting schedule | ||||||
Cash-settled units | For vesting dates, see \u201c\u2013 Note\u00a033.1: LTIP\u201d | |||||
Equity-settled units | May\u00a02021 | May\u00a02022 | May\u00a02023 | May\u00a02024 | May\u00a02025 | May\u00a02026 |
(1) 2017 and 2018 awards were granted before the appointment of the CEO and could vest during the CEO\u2019s mandate. |
Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
As of 31\u00a0December 2022, provisions of \u20ac\u20091,301,397 (2021: \u20ac\u20091,188,050) relating to Performance Units have been recognised. The pay-out from vested cash-settled LTIP in 2022 was \u20ac\u2009226,388 (2021: \u20ac\u2009324,504) excluding social charges.
The termination benefit applicable to the CEO is described in the Company\u2019s Remuneration policy.
As stipulated in the Company\u2019s Remuneration Policy, the benefits offered to the CEO are similar to the benefits granted to other executives of the Company and comprise, among other matters, medical, death and disability coverage (both through the French social security system and mandatory collective Company\u2019s plans), a company car and usual facilities. Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. The monetary value of other benefits provided to the CEO in 2022 amounted to \u20ac\u200932,734 (2021: \u20ac\u200932,479).
The Company has not provided any loans to, advances to and guarantees on behalf of the CEO.
The remuneration of the Non-Executive Members of the Board of Directors was as follows:
(In \u20ac) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Fixum\u00a0(1) | Attendance Fees\u00a0(2) | Total | Fixum (1) | Attendance Fees (2) | Total | |
Non-Executive Board Members | ||||||
Ren\u00e9 Obermann | 225,000 | 135,000 | 360,000 | 210,000 | 90,000 | 300,000 |
Victor Chu | 100,000 | 66,000 | 166,000 | 100,000 | 43,000 | 143,000 |
Jean-Pierre Clamadieu | 140,000 | 96,500 | 236,500 | 130,000 | 67,500 | 197,500 |
Ralph D. Crosby, Jr. | 100,000 | 100,000 | 200,000 | 100,000 | 61,000 | 161,000 |
Mark Dunkerley\u00a0(3) | 124,420 | 112,000 | 236,420 | 100,000 | 66,000 | 166,000 |
Stephan Gemkow | 110,000 | 98,000 | 208,000 | 100,000 | 63,000 | 163,000 |
Catherine Guillouard | 140,000 | 98,000 | 238,000 | 130,000 | 67,500 | 197,500 |
Amparo Moraleda | 140,000 | 103,000 | 243,000 | 130,000 | 54,500 | 184,500 |
Claudia Nemat | 100,000 | 76,500 | 176,500 | 100,000 | 56,500 | 156,500 |
Irene Rummelhoff\u00a0(4) | 72,100 | 75,000 | 147,100 | - | - | - |
Tony Wood\u00a0(5) | 3,913 | 10,000 | 13,913 | - | - | - |
Former Non-Executive Board Members | ||||||
Lord Drayson\u00a0(6) | 33,811 | 15,000 | 48,811 | 120,000 | 49,500 | 169,500 |
Carlos Tavares\u00a0(7) | 22,541 | 5,000 | 27,541 | 80,000 | 45,000 | 125,000 |
Total | 1,311,785 | 990,000 | 2,301,785 | 1,300,000 | 663,500 | 1,963,500 |
(1) Fixum includes a base fee for Board membership and the relevant Committee membership as the case may be (Audit Committee, Remuneration, Nomination and Governance Committee (\u201cRNGC\u201d), Ethics, Compliance and Sustainability Committee (\u201cECSC\u201d) and/or ad hoc Committee). The fixum for the year 2022 was paid 50% in January\u00a02022 and 50% in July\u00a02022 except in relation to the ad hoc Committee for which the full amount was paid in January\u00a02023. The fixum for the year 2021 was paid 50% in January\u00a02021 and 50% in July\u00a02021. (2) 2022 attendance fees include the Board attendance fees and the fees in relation to the relevant Committee (Audit Committee, RNGC and ECSC) meetings. The Board attendance fees related to the first se mester 2022 were paid in July\u00a02022, those related to the second semester 2022 were paid in January\u00a02023. The Commit tees\u2019 attendance fees related to full year 2022 were paid in January\u00a02023. (3) Member of the RNGC since 12\u00a0April 2022 (4) Member of the Board of Directors and the ECSC since 12\u00a0April 2022. (5) Member of the Board of Directors since 14\u00a0December 2022 (6) Member of the Board of Directors, the RNGC and the ECSC until 12\u00a0April 2022. (7) Member of the Board of Directors until 12\u00a0April 2022. |
The Company operates in three reportable segments which reflect the internal organisational and management structure according to the nature of the products and services provided.
On 1\u00a0January 2022, Airbus Atlantic, a\u00a0wholly-owned Airbus subsidiary,\u00a0was established. The new company groups the strengths, resources and skills of Airbus\u2019s sites in Nantes and Montoir-de-Bretagne, the central functions associated with their activities, as well as the STELIA Aerospace sites worldwide.
This unification is part of the transformation project announced in April\u00a02021, aimed at strengthening the value chain of aerostructure assembly within Airbus\u2019s industrial setup.
In addition, Airbus Aerostructures\u00a0GmbH was established on 1\u00a0July 2022. The new wholly-owned Airbus subsidiary manages and delivers large structural components to Airbus. It includes four production sites in Germany: the Hamburg plant and headquarters, the plant in Stade, and the former Premium AEROTEC plants of Nordenham and Bremen. Adjacent Premium AEROTEC sites in Augsburg, Varel and Bra\u015fov will initially remain in Premium AEROTEC\u00a0GmbH and are planned to undergo restructuring and, upon successful restructuring, to be integrated into Airbus Aerostructures\u00a0GmbH by 30\u00a0June 2025.
These have no impact on the segment structure described above.
The following tables present information with respect to the Company\u2019s business segments. As a rule, inter-segment transfers are carried out on an arm\u2019s length basis. Inter-segment sales predominantly take place between Airbus and Airbus Defence and Space and between Airbus Helicopters and Airbus. Consolidation effects are reported in the column \u201cEliminations\u201d.
The Company uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended 31\u00a0December 2022 is as follows:
(In \u20ac million) | Airbus | Airbus Helicopters | Airbus | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Total revenue | 41,428 | 7,048 | 11,259 | 0 | 59,735 |
Internal revenue | (622) | (291) | (59) | 0 | (972) |
Revenue | 40,806 | 6,757 | 11,200 | 0 | 58,763 |
thereof | |||||
sales of goods at a point in time | 37,681 | 3,429 | 3,369 | 0 | 44,479 |
sales of goods over time | 18 | 310 | 4,115 | 0 | 4,443 |
services, including sales of spare parts | 3,107 | 3,018 | 3,716 | 0 | 9,841 |
Profit before financial result and income taxes (EBIT) | 4,800 | 639 | (118) | 4 | 5,325 |
thereof | |||||
depreciation and amortisation | (1,571) | (189) | (961) | 5 | (2,716) |
research and development expenses | (2,607) | (275) | (266) | 69 | (3,079) |
share of profit from investments accounted for under the equity method | (4) | 6 | 132 | 0 | 134 |
additions to other provisions\u00a0(1) | (1,035) | (342) | (788) | (19) | (2,184) |
Interest result | (232) | ||||
Other financial result | (18) | ||||
Income taxes | (939) | ||||
Profit for the period | 4,136 | ||||
(1) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
Business segment information for the year ended 31\u00a0December 2021 is as follows:
(In \u20ac million) | Airbus | Airbus Helicopters | Airbus | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Total revenue | 36,164 | 6,509 | 10,186 | 0 | 52,859 |
Internal revenue | (425) | (230) | (55) | 0 | (710) |
Revenue | 35,739 | 6,279 | 10,131 | 0 | 52,149 |
thereof | |||||
sales of goods at a point in time | 33,455 | 3,298 | 3,076 | 0 | 39,829 |
sales of goods over time | 20 | 192 | 3,557 | 0 | 3,769 |
services, including sales of spare parts | 2,264 | 2,789 | 3,498 | 0 | 8,551 |
Profit before financial result and income taxes (EBIT) | 4,175 | 535 | 568 | 64 | 5,342 |
thereof | |||||
depreciation and amortisation | (1,616) | (184) | (525) | 0 | (2,325) |
research and development expenses | (2,252) | (275) | (249) | 30 | (2,746) |
share of profit from investments accounted for under the equity method | (29) | 0 | 69 | 0 | 40 |
additions to other provisions | (989) | (398) | (870) | 27 | (2,230) |
Interest result | (246) | ||||
Other financial result | (69) | ||||
Income taxes | (853) | ||||
Profit for the period | 4,174 |
Segment capital expenditures (In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Airbus | 1,730 | 1,270 |
Airbus Helicopters | 183 | 175 |
Airbus Defence and Space | 551 | 483 |
Eliminations | 0 | 0 |
Total capital expenditures\u00a0(1) | 2,464 | 1,928 |
(1) Excluding expenditure for leased assets. |
Segment assets (In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Airbus | 68,367 | 60,673 |
Airbus Helicopters | 9,262 | 8,500 |
Airbus Defence and Space | 17,835 | 17,081 |
Eliminations | (8,505) | (6,765) |
Total segment assets | 86,959 | 79,489 |
Unallocated | ||
Deferred and current tax assets | 5,387 | 4,875 |
Securities | 7,775 | 8,111 |
Cash and cash equivalents | 15,823 | 14,572 |
Assets classified as held for sale | 0 | 0 |
Total assets | 115,944 | 107,047 |
Revenue by geographical areas is disclosed in \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d. Property, plant and equipment by geographical areas is disclosed in \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d.\u00a0
Segment order backlog | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
(In \u20ac million) | (in %) | (In \u20ac million) | (in %) | |
Airbus | 390,456 | 86 | 345,101 | 87 |
Airbus Helicopters | 20,774 | 5 | 17,985 | 4 |
Airbus Defence and Space | 38,426 | 9 | 36,131 | 9 |
Eliminations | (415) | 0 | (778) | 0 |
Total | 449,241 | 100 | 398,439 | 100 |
As of 31\u00a0December 2022, the total backlog represents the aggregate amount of the transaction price allocated to the unsatisfied and partially unsatisfied performance obligations to the Company\u2019s customers. Backlog commitments are relative to the Company\u2019s enforceable contracts with its customers where it is probable that the consideration will be collected. As a result, contractual rebates, engines concessions, and variable considerations are taken into consideration for measurement. Contracts stipulated in a currency different than the presentation currency are translated to euro using the spot rate as of 31\u00a0December 2022 and 2021 respectively. Adjustments to the value of the backlog could result from changes in the transaction price. The backlog will mainly be released into revenue over a period of eight years.
The increase mainly reflects a book to bill above one and the strengthening of the US dollar. In Airbus, total\u00a0gross commercial aircraft\u00a0orders amount to 1078 units (2021: 771 units)\u00a0with net orders of 820 aircraft after cancellations (2021: 507 aircraft)\u00a0and total deliveries amount to 661 units (2021: 611 units) as of 31\u00a0December 2022.", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-33": { "value": "The gross margin increased by \u20ac\u2009+940\u00a0million to \u20ac\u200910,571\u00a0million compared to \u20ac\u20099,631\u00a0million in 2021, mainly driven by higher aircraft deliveries. It includes a non-recurring positive impact related to the re-measurement of past service cost in the retirement obligations of \u20ac\u00a00.4\u00a0billion and the release of compliance-related provisions of \u20ac\u20090.3\u00a0billion (see \u201c\u2013 Note\u00a025: Provisions\u201d), offset by additional losses on A400M of \u20ac\u20090.5\u00a0billion, contract-related provisions of \u20ac\u20090.3\u00a0billion and exceptional premium granted to employees of \u20ac\u20090.3\u00a0billion. The gross margin rate decreased from 18.5% to 18%.
The Company has performed an assessment of the impacts of inflation which mainly relate to the overtime contracts within Airbus Defence and Space, in particular the A400M programme for \u20ac\u20090.2\u00a0billion.
In 2022, the Company has delivered a total of 115 A400M aircraft including 10 aircraft in 2022.
The Company has continued with development activities toward achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer.
In 2021, an update of the contract Estimate At Completion (EAC) was performed and an additional charge of \u20ac\u2009212\u00a0million recorded reflecting mainly the updated estimates on the delivery pattern of the launch contract and the associated impact on unabsorbed costs.\u00a0In 2022, an update of the contract EAC has been performed and an additional charge of \u20ac\u2009477\u00a0million recorded. This mainly reflects updated assumptions, including inflation and risks related to the remaining SOC3\u00a0contractual development milestones to be achieved.
Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing export orders in time as per the revised baseline.
Defence export licences to Saudi Arabia were suspended by the German Government until 31\u00a0March 2020 and are awaiting renewal. In 2022, the Company updated its contract EAC which confirmed the 2021 position. The Company continues to engage with its customer to agree a way forward. The outcome of these actions is presently unclear but could result in further significant financial impacts.
In a notice of termination dated 9\u00a0June 2022, the Norwegian Defence Material Agency notified NHIndustries\u00a0SAS (\u201cNHI\u201d) of the Norwegian Ministry of Defence\u2019s decision to terminate its contract for the supply of 14 NH90 helicopters. In a press release dated 10\u00a0June 2022, NHI noted it \u201cis extremely disappointed by the decision taken by the Norwegian Ministry of Defence and refutes the allegations being made against the NH90 as well as against [NHI].\u201d NHI considers the termination to be legally groundless and reserves its right to take any necessary legal action to challenge it. The parties are engaging in discussions with a view to resolve this matter.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f5798": { "value": "(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Wages, salaries and social contributions | 13,509 | 12,913 |
Net periodic pension cost\u00a0(1) | 136 | 356 |
Total | 13,645 | 13,269 |
(1) See \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d. |
In 2022, personnel expenses include\u00a0\u20ac\u20090.3\u00a0billion of\u00a0exceptional premiums granted to Airbus employees in the context of elevated inflation.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-34": { "value": "
Other income decreased by \u20ac\u2009-123\u00a0million to \u20ac\u2009471\u00a0million compared to \u20ac\u2009594\u00a0million in 2021. In 2022, it includes an insurance income of \u20ac\u2009200\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d). In 2021, it included a restructuring provision release of \u20ac\u2009207\u00a0million and the gain of \u20ac\u2009122\u00a0million for the divestment of one of its sites to a joint venture.
Other expenses increased by \u20ac\u2009389\u00a0million to \u20ac\u2009-590\u00a0million compared to \u20ac\u2009-201\u00a0million in 2021, mainly due to the impact of \u20ac -437\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d).(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Wages, salaries and social contributions | 13,509 | 12,913 |
Net periodic pension cost\u00a0(1) | 136 | 356 |
Total | 13,645 | 13,269 |
(1) See \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d. |
In 2022, personnel expenses include\u00a0\u20ac\u20090.3\u00a0billion of\u00a0exceptional premiums granted to Airbus employees in the context of elevated inflation.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f5811": { "value": "
Other income decreased by \u20ac\u2009-123\u00a0million to \u20ac\u2009471\u00a0million compared to \u20ac\u2009594\u00a0million in 2021. In 2022, it includes an insurance income of \u20ac\u2009200\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d). In 2021, it included a restructuring provision release of \u20ac\u2009207\u00a0million and the gain of \u20ac\u2009122\u00a0million for the divestment of one of its sites to a joint venture.
Other expenses increased by \u20ac\u2009389\u00a0million to \u20ac\u2009-590\u00a0million compared to \u20ac\u2009-201\u00a0million in 2021, mainly due to the impact of \u20ac -437\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-136": { "value": "Other income decreased by \u20ac\u2009-123\u00a0million to \u20ac\u2009471\u00a0million compared to \u20ac\u2009594\u00a0million in 2021. In 2022, it includes an insurance income of \u20ac\u2009200\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d). In 2021, it included a restructuring provision release of \u20ac\u2009207\u00a0million and the gain of \u20ac\u2009122\u00a0million for the divestment of one of its sites to a joint venture.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-135": { "value": "Other expenses increased by \u20ac\u2009389\u00a0million to \u20ac\u2009-590\u00a0million compared to \u20ac\u2009-201\u00a0million in 2021, mainly due to the impact of \u20ac -437\u00a0million linked to the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 in December\u00a02022 (see \u201c\u2013 Note\u00a021: Property, Plant and Equipment\u201d).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-37": { "value": "(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Share of profit from investments in joint ventures | 99 | 73 |
Share of profit from investments in associates | 35 | (33) |
Share of profit from investments accounted for under the equity method | 134 | 40 |
Other income from investments | 58 | 76 |
Share of profit from investments under the equity method and other income from investments increased by \u20ac\u200976\u00a0million to \u20ac\u2009192\u00a0million compared to \u20ac\u2009116\u00a0million in 2021, mainly linked to higher share of result from equity investments, partly offset by the dividends received in 2021 from other investments classified at fair value through OCI.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Other investments | 2,641 | 2,511 |
Other long-term financial assets | 1,549 | 1,490 |
Total non-current other investments and other long-term financial assets | 4,190 | 4,001 |
Current portion of other long-term financial assets | 665 | 537 |
Total | 4,855 | 4,538 |
Other investments mainly comprise the Company\u2019s participations and include the remaining investment in Dassault Aviation (9.90%, 2021: 9.90%) amounting to \u20ac\u20091,309\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u2009786\u00a0million). It is partly offset by the decrease in fair value of other investments.
Other long-term financial assets and the current portion of other long-term financial assets include other loans in the amount of \u20ac\u20092,129\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,909\u00a0million), and the sales financing activities in the form of finance lease receivables and loans from aircraft financing.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f5888": { "value": "Interest income derived from the Company\u2019s asset management and lending activities is recognised as interest accrues, using the effective interest rate method.
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Interests on European Governments\u2019 refundable advances | (133) | (112) |
Others | (99) | (134) |
Total interest result\u00a0(1) | (232) | (246) |
Change in fair value measurement of financial instruments | (346) | (370) |
Foreign exchange translations on monetary items | (99) | 53 |
Unwinding of discounted provisions | 8 | (19) |
Others | 419 | 267 |
Total other financial result | (18) | (69) |
Total | (250) | (315) |
(1) In 2022, the total interest income amounts to \u20ac\u2009180\u00a0million (2021: \u20ac\u200988\u00a0million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities which are not measured at fair value through profit or loss \u20ac\u2009-412\u00a0million (2021: \u20ac\u2009-334\u00a0million) are recognised as total interest expenses. Both amounts are calculated by using the effective interest method. |
The expense for income taxes is comprised of the following:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Current tax expense | (536) | (348) |
Deferred tax expense | (403) | (505) |
Total | (939) | (853) |
Main income tax rates and main changes impacting the Company:
(Rate in %) | 2022 | 2023 | > 2024 |
|---|---|---|---|
Netherlands | 25.80 | 25.80 | 25.80 |
France | 25.83 | 25.83 | 25.83 |
Germany | 30.00 | 30.00 | 30.00 |
Spain | 25.00 | 25.00 | 25.00 |
UK\u00a0(1) | 19.00 | 25.00 | 25.00 |
(1) A tax law has been enacted in 2022 increasing the rate for income taxes to 25.00% from April\u00a02023 and beyond. |
The following table shows a reconciliation from the theoretical income tax (expense) using the Dutch corporate tax rate to the reported income tax (expense):
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Profit before income taxes | 5,075 | 5,027 |
Corporate income tax rate | 25.8% | 25.0% |
Expected (expense) for income taxes | (1,309) | (1,257) |
Effects from tax rate differentials / Change of tax rate | 39 | (103) |
Capital gains and losses on disposals / mergers | 0 | 5 |
Income from investment and associates | 29 | 23 |
Tax credit | 41 | 53 |
Change in valuation allowances\u00a0(1) | 53 | 116 |
Tax contingencies | 156 | 186 |
Other non-deductible expenses and tax-free income | 52 | 124 |
Reported tax (expense) | (939) | (853) |
(1) Reassessments of the recoverability of deferred tax assets based on future taxable profits. |
The\u00a0income tax\u00a0expense amounts to \u20ac\u2009-939\u00a0million (2021: \u20ac\u2009-853\u00a0million) and corresponds to an effective income tax rate of 18.5%. This includes impacts on the tax-free revaluation of certain equity investments under IFRS\u00a09, tax risk updates and deferred tax asset impairments. In addition, the establishment of Airbus Aerostructures\u00a0GmbH and the restructuring of Premium AEROTEC\u00a0GmbH (see \u201c \u2013 Note\u00a012: Segment Information\u201d) led to a release of deferred tax asset impairment of \u20ac\u2009536\u00a0million out of which \u20ac\u2009336\u00a0million recorded in the income statement and \u20ac\u2009200\u00a0million in other comprehensive income.
In 2021, the effective tax rate included positive impacts from tax risk updates,\u00a0the tax-free revaluation of certain equity investments under IFRS\u00a09\u00a0and a net release of deferred tax asset impairments mainly due to an updated business outlook.
As the Company controls the timing of the reversal of temporary differences associated with its subsidiaries (usually referred to as \u201coutside basis differences\u201d) arising from yet undistributed profits and changes in foreign exchange rates, it does not recognise a deferred tax liability. For temporary differences arising from investments in associates the Company recognises deferred tax liabilities. The rate used reflects the assumptions that these differences will be recovered from dividend distribution unless a management resolution for the divestment of the investment exists at the closing date. For joint ventures, the Company assesses its ability to control the distribution of dividends based on existing shareholder agreements and recognises deferred tax liabilities accordingly.
As of 31\u00a0December 2022, the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to \u20ac\u2009172\u00a0million.
Deferred taxes on net operating losses (\u201cNOLs\u201d), trade tax loss carry forwards and tax credit carry forwards are:
(In \u20ac million) | France | Germany | Spain | UK | Other | 31 December | 31 December |
|---|---|---|---|---|---|---|---|
NOL | 60 | 3,429 | 94 | 1,130 | 3,448 | 8,161 | 8,285 |
Trade tax loss carry forwards | 0 | 3,719 | 0 | 0 | 0 | 3,719 | 3,530 |
Tax credit carry forwards | 0 | 0 | 223 | 0 | 2 | 225 | 221 |
Tax effect | 15 | 1,069 | 246 | 283 | 893 | 2,506 | 2,519 |
Valuation allowances | (12) | (587) | (127) | (92) | (852) | (1,670) | (2,001) |
Deferred tax assets on NOLs and tax credit carry forwards | 3 | 482 | 119 | 191 | 41 | 836 | 518 |
NOLs, capital losses and trade tax loss carry forwards are indefinitely usable under certain restrictions in France, Germany, the UK and Spain. They are usable for 20\u00a0years in Canada. In Spain, R&D tax credit carry forwards will expire after 18\u00a0years.
Roll forward of deferred tax:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Net deferred tax assets at 1\u00a0January | 4,207 | 3,572 |
Deferred tax expense in income statement | (403) | (505) |
Deferred tax recognised directly in AOCI | 935 | 1,435 |
Deferred tax on remeasurement of the net defined benefit pension plans | (320) | (368) |
Others | 100 | 73 |
Net deferred tax assets at 31\u00a0December | 4,519 | 4,207 |
Details of deferred tax recognised cumulatively in equity are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets at fair value through OCI | (24) | (102) |
Cash flow hedges | 2,180 | 1,323 |
Deferred tax on remeasurement of the net defined benefit pension plans | 1,806 | 2,126 |
Total | 3,962 | 3,347 |
Deferred income taxes as of 31\u00a0December 2022 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2022 | Other movements | Movement through income statement | 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 249 | (551) | 0 | (26) | 0 | 41 | 305 | (592) |
Property, plant and equipment | 49 | (813) | 0 | (1) | 0 | (281) | 76 | (1,122) |
Investments and other long-term financial assets | 1,221 | (108) | 0 | 6 | 0 | 304 | 1,497 | (74) |
Inventories | 3,658 | (1,493) | 0 | (1) | 0 | 478 | 3,745 | (1,103) |
Receivables and other assets | 806 | (1,489) | 1,986 | 4 | 0 | (2,721) | 13 | (1,427) |
Prepaid expenses | 11 | (3) | 0 | (1) | 0 | 3 | 10 | 0 |
Provisions for retirement plans | 1,071 | 12 | (770) | 43 | 0 | (54) | 580 | (278) |
Other provisions | 754 | (137) | 0 | 24 | 0 | (694) | 234 | (287) |
Liabilities | 2,930 | (1,823) | (900) | (4) | 0 | 2,297 | 3,790 | (1,290) |
Deferred income | (5) | (242) | 0 | 2 | 0 | 212 | 84 | (117) |
NOLs and tax credit carry forwards | 2,519 | 0 | 0 | 23 | 5 | (41) | 2,506 | 0 |
Deferred tax assets (liabilities) before offsetting | 13,263 | (6,647) | 316 | 69 | 5 | (456) | 12,840 | (6,290) |
Valuation allowances on deferred tax assets | (2,409) | 0 | 299 | (20) | 46 | 53 | (2,031) | 0 |
Set-off | (6,531) | 6,531 | 0 | 0 | 0 | 0 | (6,126) | 6,126 |
Net deferred tax assets (liabilities) | 4,323 | (116) | 615 | 49 | 51 | (403) | 4,683 | (164) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
Deferred income taxes as of 31\u00a0December 2021 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2021 | Other movements | Movement through income statement | 31 December 2021 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 186 | (489) | 0 | (71) | 0 | 72 | 249 | (551) |
Property, plant and equipment | 30 | (313) | 0 | 67 | 0 | (548) | 49 | (813) |
Investments and other long-term financial assets | 1,174 | (83) | 0 | 0 | 0 | 22 | 1,221 | (108) |
Inventories | 3,088 | (1,603) | 0 | 21 | 0 | 659 | 3,658 | (1,493) |
Receivables and other assets | 2,457 | (1,692) | (424) | 17 | 0 | (1,041) | 806 | (1,489) |
Prepaid expenses | 0 | (2) | 0 | 0 | 0 | 10 | 11 | (3) |
Provisions for retirement plans | 1,188 | 0 | (450) | 114 | 0 | 231 | 1,071 | 12 |
Other provisions | 2,043 | (330) | 0 | 55 | 0 | (1,151) | 754 | (137) |
Liabilities | 1,966 | (3,665) | 1,886 | (194) | 0 | 1,114 | 2,930 | (1,823) |
Deferred income | 53 | (117) | 0 | 16 | 0 | (199) | (5) | (242) |
NOLs and tax credit carry forwards | 2,283 | 0 | 0 | 50 | (24) | 210 | 2,519 | 0 |
Deferred tax assets (liabilities) before offsetting | 14,468 | (8,294) | 1,012 | 75 | (24) | (621) | 13,263 | (6,647) |
Valuation allowances on deferred tax assets | (2,602) | 0 | 55 | (37) | 59 | 116 | (2,409) | 0 |
Set-off | (7,843) | 7,843 | 0 | 0 | 0 | 0 | (6,531) | 6,531 |
Net deferred tax assets (liabilities) | 4,023 | (451) | 1,067 | 38 | 35 | (505) | 4,323 | (116) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
As of 31\u00a0December 2022, the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to \u20ac\u2009172\u00a0million.
Deferred taxes on net operating losses (\u201cNOLs\u201d), trade tax loss carry forwards and tax credit carry forwards are:
(In \u20ac million) | France | Germany | Spain | UK | Other | 31 December | 31 December |
|---|---|---|---|---|---|---|---|
NOL | 60 | 3,429 | 94 | 1,130 | 3,448 | 8,161 | 8,285 |
Trade tax loss carry forwards | 0 | 3,719 | 0 | 0 | 0 | 3,719 | 3,530 |
Tax credit carry forwards | 0 | 0 | 223 | 0 | 2 | 225 | 221 |
Tax effect | 15 | 1,069 | 246 | 283 | 893 | 2,506 | 2,519 |
Valuation allowances | (12) | (587) | (127) | (92) | (852) | (1,670) | (2,001) |
Deferred tax assets on NOLs and tax credit carry forwards | 3 | 482 | 119 | 191 | 41 | 836 | 518 |
NOLs, capital losses and trade tax loss carry forwards are indefinitely usable under certain restrictions in France, Germany, the UK and Spain. They are usable for 20\u00a0years in Canada. In Spain, R&D tax credit carry forwards will expire after 18\u00a0years.
Roll forward of deferred tax:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Net deferred tax assets at 1\u00a0January | 4,207 | 3,572 |
Deferred tax expense in income statement | (403) | (505) |
Deferred tax recognised directly in AOCI | 935 | 1,435 |
Deferred tax on remeasurement of the net defined benefit pension plans | (320) | (368) |
Others | 100 | 73 |
Net deferred tax assets at 31\u00a0December | 4,519 | 4,207 |
Details of deferred tax recognised cumulatively in equity are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets at fair value through OCI | (24) | (102) |
Cash flow hedges | 2,180 | 1,323 |
Deferred tax on remeasurement of the net defined benefit pension plans | 1,806 | 2,126 |
Total | 3,962 | 3,347 |
Deferred income taxes as of 31\u00a0December 2022 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2022 | Other movements | Movement through income statement | 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 249 | (551) | 0 | (26) | 0 | 41 | 305 | (592) |
Property, plant and equipment | 49 | (813) | 0 | (1) | 0 | (281) | 76 | (1,122) |
Investments and other long-term financial assets | 1,221 | (108) | 0 | 6 | 0 | 304 | 1,497 | (74) |
Inventories | 3,658 | (1,493) | 0 | (1) | 0 | 478 | 3,745 | (1,103) |
Receivables and other assets | 806 | (1,489) | 1,986 | 4 | 0 | (2,721) | 13 | (1,427) |
Prepaid expenses | 11 | (3) | 0 | (1) | 0 | 3 | 10 | 0 |
Provisions for retirement plans | 1,071 | 12 | (770) | 43 | 0 | (54) | 580 | (278) |
Other provisions | 754 | (137) | 0 | 24 | 0 | (694) | 234 | (287) |
Liabilities | 2,930 | (1,823) | (900) | (4) | 0 | 2,297 | 3,790 | (1,290) |
Deferred income | (5) | (242) | 0 | 2 | 0 | 212 | 84 | (117) |
NOLs and tax credit carry forwards | 2,519 | 0 | 0 | 23 | 5 | (41) | 2,506 | 0 |
Deferred tax assets (liabilities) before offsetting | 13,263 | (6,647) | 316 | 69 | 5 | (456) | 12,840 | (6,290) |
Valuation allowances on deferred tax assets | (2,409) | 0 | 299 | (20) | 46 | 53 | (2,031) | 0 |
Set-off | (6,531) | 6,531 | 0 | 0 | 0 | 0 | (6,126) | 6,126 |
Net deferred tax assets (liabilities) | 4,323 | (116) | 615 | 49 | 51 | (403) | 4,683 | (164) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
Deferred income taxes as of 31\u00a0December 2021 are related to the following assets and liabilities:
(In \u20ac million) | 1 January 2021 | Other movements | Movement through income statement | 31 December 2021 | ||||
|---|---|---|---|---|---|---|---|---|
Deferred tax assets | Deferred tax liabilities | OCI / | Others (1) | R&D tax credits | Deferred tax benefit (expense) | Deferred tax assets | Deferred tax liabilities | |
Intangible assets | 186 | (489) | 0 | (71) | 0 | 72 | 249 | (551) |
Property, plant and equipment | 30 | (313) | 0 | 67 | 0 | (548) | 49 | (813) |
Investments and other long-term financial assets | 1,174 | (83) | 0 | 0 | 0 | 22 | 1,221 | (108) |
Inventories | 3,088 | (1,603) | 0 | 21 | 0 | 659 | 3,658 | (1,493) |
Receivables and other assets | 2,457 | (1,692) | (424) | 17 | 0 | (1,041) | 806 | (1,489) |
Prepaid expenses | 0 | (2) | 0 | 0 | 0 | 10 | 11 | (3) |
Provisions for retirement plans | 1,188 | 0 | (450) | 114 | 0 | 231 | 1,071 | 12 |
Other provisions | 2,043 | (330) | 0 | 55 | 0 | (1,151) | 754 | (137) |
Liabilities | 1,966 | (3,665) | 1,886 | (194) | 0 | 1,114 | 2,930 | (1,823) |
Deferred income | 53 | (117) | 0 | 16 | 0 | (199) | (5) | (242) |
NOLs and tax credit carry forwards | 2,283 | 0 | 0 | 50 | (24) | 210 | 2,519 | 0 |
Deferred tax assets (liabilities) before offsetting | 14,468 | (8,294) | 1,012 | 75 | (24) | (621) | 13,263 | (6,647) |
Valuation allowances on deferred tax assets | (2,602) | 0 | 55 | (37) | 59 | 116 | (2,409) | 0 |
Set-off | (7,843) | 7,843 | 0 | 0 | 0 | 0 | (6,531) | 6,531 |
Net deferred tax assets (liabilities) | 4,023 | (451) | 1,067 | 38 | 35 | (505) | 4,323 | (116) |
(1) \u201cOthers\u201d mainly comprises changes in the consolidation scope and foreign exchange rate effects. |
2022 | 2021 | |
|---|---|---|
Profit for the period attributable to equity owners of the parent (Net income) | \u20ac\u20094,247\u00a0million | \u20ac\u20094,213\u00a0million |
Weighted average number of ordinary shares | 787,080,579 | 785,326,074 |
Basic earnings per share | \u20ac\u20095.40 | \u20ac\u20095.36 |
Diluted earnings per share \u2013 The Company\u2019s dilutive potential ordinary shares are equity-settled Performance Shares relating to Long-Term Incentive Plans (\u201cLTIP\u201d).
In 2022, a total of 672,906 equity-settled Performance Shares was considered in the calculation of diluted earnings per share. LTIP 2022 plan has been excluded from the calculation because of its antidilutive effect.
2022 | 2021 | |
|---|---|---|
Profit for the period attributable to equity owners of the parent (Net income), adjusted for diluted calculation | \u20ac\u20094,247\u00a0million | \u20ac\u20094,213\u00a0million |
Weighted average number of ordinary shares (diluted) | 787,753,485 | 785,761,995 |
Diluted earnings per share | \u20ac\u20095.39 | \u20ac\u20095.36 |
Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.
The Company tested the intangible assets for which an indicator of impairment was identified. In particular, the Company tested the intangible assets associated with some aircraft programmes and concluded that no impairment was necessary.
As of 31\u00a0December 2022 and 2021, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
(In \u20ac million) | Airbus | Airbus | Airbus Defence and Space | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Goodwill as of 31 December 2022 | 10,816 | 199 | 2,150 | 0 | 13,165 |
Goodwill as of 31 December 2021 | 10,731 | 139 | 2,158 | 0 | 13,028 |
The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2022 led to no impairment charge. The Company performed sensitivity tests in order to confirm that the recoverability of its long-lived assets was not impaired by climate change. No reasonably possible changes in the main assumptions used (including climate change) would cause the value in use of the goodwill to fall below its carrying value.
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.The Company tested the intangible assets for which an indicator of impairment was identified. In particular, the Company tested the intangible assets associated with some aircraft programmes and concluded that no impairment was necessary.
As of 31\u00a0December 2022 and 2021, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
(In \u20ac million) | Airbus | Airbus | Airbus Defence and Space | Eliminations | Consolidated Airbus |
|---|---|---|---|---|---|
Goodwill as of 31 December 2022 | 10,816 | 199 | 2,150 | 0 | 13,165 |
Goodwill as of 31 December 2021 | 10,731 | 139 | 2,158 | 0 | 13,028 |
The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2022 led to no impairment charge. The Company performed sensitivity tests in order to confirm that the recoverability of its long-lived assets was not impaired by climate change. No reasonably possible changes in the main assumptions used (including climate change) would cause the value in use of the goodwill to fall below its carrying value.
The basis for determining the recoverable amount is the value in use of the CGUs. Generally, cash flow projections used for the Company\u2019s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on the following key assumptions which are relevant for all CGUs:
General economic data derived from external macroeconomic and financial studies have been used to derive the general key assumptions.
The operative planning also takes into account expenses and investments the Company has identified to progress towards its decarbonisation ambition.
In addition to these general planning assumptions, the following additional CGU specific assumptions, which represent management\u2019s current best assessment as of the date of these Consolidated Financial Statements, have been applied.
Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:
Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
Property, plant and equipment as of 31\u00a0December 2022 and 2021 comprises the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross | Depreciation / Impairment | Net book | Gross | Depreciation / Impairment | Net book | |
Land, leasehold improvements and buildings, including buildings on land owned by others | 10,536 | (5,539) | 4,997 | 10,344 | (5,324) | 5,020 |
Technical equipment and machinery | 21,982 | (15,286) | 6,696 | 23,697 | (16,609) | 7,088 |
Other equipment, factory and office equipment\u00a0(1) | 3,932 | (3,107) | 825 | 3,853 | (3,013) | 840 |
Construction in progress | 2,241 | 0 | 2,241 | 1,890 | 0 | 1,890 |
Right-of-use assets\u00a0(2) | 2,578 | (832) | 1,746 | 2,486 | (788) | 1,698 |
Total | 41,269 | (24,764) | 16,505 | 42,270 | (25,734) | 16,536 |
(1) Includes the net book value of aircraft under operating lease (see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d). (2) The net book value of Land and Buildings under Right-of-use assets amounts to \u20ac\u20091,625\u00a0million. |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi- | Disposals | Depreciation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 5,020 | (20) | 21 | 4 | 227 | (21) | (234) | 4,997 |
Technical equipment and machinery | 7,088 | 10 | 310 | 2 | 942 | (44) | (1,612) | 6,696 |
Other equipment, factory and office equipment | 840 | 10 | 299 | 6 | 62 | (215) | (177) | 825 |
Construction in progress | 1,890 | (5) | 1,479 | 0 | (1,123) | 0 | 0 | 2,241 |
Right-of-use assets | 1,698 | 33 | 308 | 0 | (29) | (40) | (224) | 1,746 |
Total | 16,536 | 28 | 2,417 | 12 | 79 | (320) | (2,247) | 16,505 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Depreciation / Impairment (1) | Balance at |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 4,681 | 43 | 48 | 5 | 641 | (71) | (327) | 5,020 |
Technical equipment and machinery | 7,068 | 106 | 225 | 1 | 1,038 | (66) | (1,284) | 7,088 |
Other equipment, factory and office equipment | 811 | 14 | 150 | 2 | 66 | (7) | (196) | 840 |
Construction in progress | 2,310 | 16 | 1,289 | 2 | (1,678) | (49) | 0 | 1,890 |
Right-of-use assets | 1,804 | 59 | 240 | 0 | (96) | (49) | (260) | 1,698 |
Total | 16,674 | 238 | 1,952 | 10 | (29) | (242) | (2,067) | 16,536 |
(1) Accelerated depreciation previously included in onerous contract provision has been offset with the release of the provision in the presentation of the Consolidated Statement of Cash Flows for the year ended 2021. |
Property, plant and equipment decreased by \u20ac\u2009-31\u00a0million to \u20ac\u200916,505\u00a0million (2021: \u20ac\u200916,536\u00a0million). Property, plant and equipment include right-of-use assets for an amount of \u20ac\u20091,746\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,698\u00a0million).
Following the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 on 21\u00a0December 2022, the corresponding fixed assets were written-off for a total of \u20ac\u2009248\u00a0million and an impairment of \u20ac\u2009184\u00a0million has been recorded for the remaining Pl\u00e9iades Neo assets value partly offset by the insurance receivable of \u20ac\u2009200\u00a0million, all recognized as of 31\u00a0December 2022 in other income and other expenses (see \u201c\u2013 Note\u00a015: Other Income and Other Expenses\u201d).
Based on management\u2019s best estimate, there is no impact on the useful life of Property, plant and equipment, considering the Company\u2019s journey towards sustainable aerospace, climate risks and current amortisation schemes over asset life (see \u201c\u2013 Note 7: Climate Impacts\u201d).
For details on assets related to lease arrangements on sales financing, see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-44": { "value": "Intangible assets comprise (i)\u00a0goodwill (see \u201c\u2013 Note\u00a08: Scope of Consolidation\u201d), (ii)\u00a0capitalised development costs (see \u201c\u2013 Note\u00a04: Significant Accounting Policies\u201d) and (iii)\u00a0other intangible assets, e.g. internally developed software and acquired intangible assets.Intangible assets with finite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives (three to ten years) to their estimated residual values.
31\u00a0December 2022 and 2021 comprise the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross amount | Amortisation / Impairment | Net book value | Gross amount | Amortisation / Impairment | Net book value | |
Goodwill | 14,205 | (1,040) | 13,165 | 14,072 | (1,044) | 13,028 |
Capitalised development costs | 2,801 | (1,319) | 1,482 | 2,534 | (1,248) | 1,286 |
Other intangible assets | 5,350 | (3,229) | 2,121 | 5,043 | (2,990) | 2,053 |
Total | 22,356 | (5,588) | 16,768 | 21,649 | (5,282) | 16,367 |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Goodwill | 13,028 | 10 | 0 | 127 | 0 | 0 | 0 | 13,165 |
Capitalised development costs | 1,286 | (12) | 319 | 0 | (1) | 0 | (110) | 1,482 |
Other intangible assets | 2,053 | 89 | 160 | 159 | 5 | (7) | (338) | 2,121 |
Total | 16,367 | 87 | 479 | 286 | 4 | (7) | (448) | 16,768 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Amortisation / Impairment | Balance at |
|---|---|---|---|---|---|---|---|---|
Goodwill | 12,999 | 28 | 1 | 0 | 0 | 0 | 0 | 13,028 |
Capitalised development costs | 1,258 | 12 | 152 | 0 | (14) | (16) | (106) | 1,286 |
Other intangible assets | 1,942 | 113 | 199 | (1) | 16 | (5) | (211) | 2,053 |
Total | 16,199 | 153 | 352 | (1) | 2 | (21) | (317) | 16,367 |
Intangible assets increased by \u20ac\u2009+401\u00a0million to \u20ac\u200916,768\u00a0million (2021: \u20ac\u200916,367\u00a0million). Intangible assets mainly relate to goodwill of \u20ac\u200913,165\u00a0million (2021: \u20ac\u200913,028\u00a0million). The increase in goodwill is primarily due to the acquisitions of VAS Aero Services,\u00a0LLC and ZF Luftfahrttechnik\u00a0GmbH (see \u201c\u2013 Note\u00a09: Acquisitions and Disposals\u201d).
Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:
Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
Property, plant and equipment as of 31\u00a0December 2022 and 2021 comprises the following:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Gross | Depreciation / Impairment | Net book | Gross | Depreciation / Impairment | Net book | |
Land, leasehold improvements and buildings, including buildings on land owned by others | 10,536 | (5,539) | 4,997 | 10,344 | (5,324) | 5,020 |
Technical equipment and machinery | 21,982 | (15,286) | 6,696 | 23,697 | (16,609) | 7,088 |
Other equipment, factory and office equipment\u00a0(1) | 3,932 | (3,107) | 825 | 3,853 | (3,013) | 840 |
Construction in progress | 2,241 | 0 | 2,241 | 1,890 | 0 | 1,890 |
Right-of-use assets\u00a0(2) | 2,578 | (832) | 1,746 | 2,486 | (788) | 1,698 |
Total | 41,269 | (24,764) | 16,505 | 42,270 | (25,734) | 16,536 |
(1) Includes the net book value of aircraft under operating lease (see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d). (2) The net book value of Land and Buildings under Right-of-use assets amounts to \u20ac\u20091,625\u00a0million. |
(In \u20ac million) | Balance at 1 January 2022 | Exchange differences | Additions | Changes in consolidation scope | Reclassi- | Disposals | Depreciation / Impairment | Balance at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 5,020 | (20) | 21 | 4 | 227 | (21) | (234) | 4,997 |
Technical equipment and machinery | 7,088 | 10 | 310 | 2 | 942 | (44) | (1,612) | 6,696 |
Other equipment, factory and office equipment | 840 | 10 | 299 | 6 | 62 | (215) | (177) | 825 |
Construction in progress | 1,890 | (5) | 1,479 | 0 | (1,123) | 0 | 0 | 2,241 |
Right-of-use assets | 1,698 | 33 | 308 | 0 | (29) | (40) | (224) | 1,746 |
Total | 16,536 | 28 | 2,417 | 12 | 79 | (320) | (2,247) | 16,505 |
(In \u20ac million) | Balance at 1 January 2021 | Exchange differences | Additions | Changes in consolidation scope | Reclassi-fication | Disposals | Depreciation / Impairment (1) | Balance at |
|---|---|---|---|---|---|---|---|---|
Land, leasehold improvements and buildings, including buildings on land owned by others | 4,681 | 43 | 48 | 5 | 641 | (71) | (327) | 5,020 |
Technical equipment and machinery | 7,068 | 106 | 225 | 1 | 1,038 | (66) | (1,284) | 7,088 |
Other equipment, factory and office equipment | 811 | 14 | 150 | 2 | 66 | (7) | (196) | 840 |
Construction in progress | 2,310 | 16 | 1,289 | 2 | (1,678) | (49) | 0 | 1,890 |
Right-of-use assets | 1,804 | 59 | 240 | 0 | (96) | (49) | (260) | 1,698 |
Total | 16,674 | 238 | 1,952 | 10 | (29) | (242) | (2,067) | 16,536 |
(1) Accelerated depreciation previously included in onerous contract provision has been offset with the release of the provision in the presentation of the Consolidated Statement of Cash Flows for the year ended 2021. |
Property, plant and equipment decreased by \u20ac\u2009-31\u00a0million to \u20ac\u200916,505\u00a0million (2021: \u20ac\u200916,536\u00a0million). Property, plant and equipment include right-of-use assets for an amount of \u20ac\u20091,746\u00a0million as of 31\u00a0December 2022 (2021: \u20ac\u20091,698\u00a0million).
Following the launch failure of the two satellites Pl\u00e9iades Neo 5 and 6 on 21\u00a0December 2022, the corresponding fixed assets were written-off for a total of \u20ac\u2009248\u00a0million and an impairment of \u20ac\u2009184\u00a0million has been recorded for the remaining Pl\u00e9iades Neo assets value partly offset by the insurance receivable of \u20ac\u2009200\u00a0million, all recognized as of 31\u00a0December 2022 in other income and other expenses (see \u201c\u2013 Note\u00a015: Other Income and Other Expenses\u201d).
Based on management\u2019s best estimate, there is no impact on the useful life of Property, plant and equipment, considering the Company\u2019s journey towards sustainable aerospace, climate risks and current amortisation schemes over asset life (see \u201c\u2013 Note 7: Climate Impacts\u201d).
For details on assets related to lease arrangements on sales financing, see \u201c\u2013 Note\u00a028: Sales Financing Transactions\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f7556": { "value": "Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f7557": { "value": "Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-45": { "value": "Each year the Company assesses whether there is an indication that a non-financial asset or a cash generating unit (\u201cCGU\u201d) to which the asset belongs may be impaired. In addition, intangible assets with an indefinite useful life, intangible assets not yet available for use and goodwill are tested for impairment annually, irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. For the purpose of impairment testing, any goodwill is allocated to the CGU or group of CGUs in a way that reflects the way goodwill is monitored for internal management purposes.
The discounted cash flow method is used to determine the recoverable amount of a CGU or the group of CGUs to which goodwill is allocated. The discounted cash flow method is particularly sensitive to the selected discount rates and estimates of future cash flows by management. Discount rates are based on the weighted average cost of capital (\u201cWACC\u201d) for a CGU or the groups of CGUs. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In addition, the discount rates reflect the current market assessment of the risks specific to each group of CGUs by taking into account specific peer group information on beta factors, leverage and cost of debt. Consequently, slight changes to these elements can materially affect the resulting valuation and therefore the amount of a potential impairment charge.
These estimates are influenced by several assumptions including the growth rate of CGUs where a rate of 1% has been applied, the increase of deliveries in the coming years, the availability and composition of future defence and institutional budgets, and foreign exchange fluctuations or implications arising from the volatility of capital markets. Cash flow projections take into account past experience and represent management\u2019s best estimate of future developments which align with the Company\u2019s climate-related commitments.Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-46": { "value": "Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Items of property, plant and equipment are generally depreciated on a straight-line basis.\u00a0The following useful lives are assumed:Buildings | 10 to 50\u00a0years |
Site improvements | 6 to 30\u00a0years |
Technical equipment and machinery | 2 to 20\u00a0years |
Jigs and tools\u00a0(1) | 5\u00a0years |
Other equipment, factory and office equipment | 2 to 10\u00a0years |
(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). |
The Company leases mainly real estate assets, cars and equipment (such as land, warehouses, storage facilities and offices).
Short-term leases and leases of low-value assets refer mainly to IT equipment (e.g. printers, laptops and mobile phones) and other equipment.
The Company incurred interest expense on lease liabilities of \u20ac\u200931\u00a0million. The expense in relation to short-term and low-value assets is insignificant.
There are no significant variable lease payments included in the Company\u2019s lease arrangements.
The discount rate used to determine the right-of-use asset and the lease liability for each country and leased asset is calculated based on the incremental borrowing rate at inception of the lease. The Company calculated the rate applicable to each lease contract on the basis of the lease duration.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is shown in \u201cNote\u00a038.1 \u2013 Financial Risk Management\u201d.
The Company leases land and buildings mainly for its operational business warehouses including logistic facilities, offices, production halls and laboratories. The major leases are located in France, Germany, the US, Canada and China. As lease contracts are negotiated on an individual basis, lease terms contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3-25\u00a0years and may include extension, termination and other options, which provide operational flexibility to the Company.
The Company leases cars for management and other functions. Vehicle leases typically run for an average period of three years and do not provide renewal options.
The Company leases mainly real estate assets, cars and equipment (such as land, warehouses, storage facilities and offices).
Short-term leases and leases of low-value assets refer mainly to IT equipment (e.g. printers, laptops and mobile phones) and other equipment.
The Company incurred interest expense on lease liabilities of \u20ac\u200931\u00a0million. The expense in relation to short-term and low-value assets is insignificant.
There are no significant variable lease payments included in the Company\u2019s lease arrangements.
The discount rate used to determine the right-of-use asset and the lease liability for each country and leased asset is calculated based on the incremental borrowing rate at inception of the lease. The Company calculated the rate applicable to each lease contract on the basis of the lease duration.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is shown in \u201cNote\u00a038.1 \u2013 Financial Risk Management\u201d.
The Company leases land and buildings mainly for its operational business warehouses including logistic facilities, offices, production halls and laboratories. The major leases are located in France, Germany, the US, Canada and China. As lease contracts are negotiated on an individual basis, lease terms contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3-25\u00a0years and may include extension, termination and other options, which provide operational flexibility to the Company.
The Company leases cars for management and other functions. Vehicle leases typically run for an average period of three years and do not provide renewal options.
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\u00a0December 2022 and 31\u00a0December 2021 are as follows:
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2022 | 130 | 62 |
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2021 | 126 | 65 |
Direct customer financing cash flows amount to \u20ac\u2009-146\u00a0million in 2022 (2021: \u20ac\u200928\u00a0million).
The on-balance sheet assets relating to sales financing, the off-balance sheet commitments and the related financing exposure (not including asset value guarantees) as of 31\u00a0December 2022 and 2021 are as follows:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Airbus | Airbus Helicopters | Total | Airbus | Airbus Helicopters | Total | |
Operating leases\u00a0(1) | 102 | 0 | 102 | 105 | 13 | 118 |
Finance leases and loans | 101 | 31 | 132 | 145 | 19 | 164 |
Inventories | 37 | 0 | 37 | 11 | 0 | 11 |
Other investments | 66 | 0 | 66 | 62 | 0 | 62 |
On-balance sheet customer financing | 306 | 31 | 337 | 323 | 32 | 355 |
Off-balance sheet customer financing | 6 | 2 | 8 | 41 | 26 | 67 |
Gross Customer Financing Exposure | 312 | 33 | 345 | 364 | 58 | 422 |
Collateral values | (262) | (33) | (295) | (282) | (58) | (340) |
Net exposure | 50 | 0 | 50 | 82 | 0 | 82 |
Operating leases | 0 | 0 | 0 | (7) | 0 | (7) |
Finance leases and loans | (40) | 0 | (40) | (53) | 0 | (53) |
On-balance sheet commitments - inventories | (5) | 0 | (5) | (6) | 0 | (6) |
Off-balance sheet commitments - provisions\u00a0(2) | (5) | 0 | (5) | (16) | 0 | (16) |
Asset impairments, fair value adjustments\u00a0 | (50) | 0 | (50) | (82) | 0 | (82) |
(1) For 2022 and 2021, depreciation amounts to \u20ac\u200911\u00a0million and \u20ac\u20091\u00a0million respectively and related accumulated depreciation is \u20ac\u200914\u00a0million and \u20ac\u20098\u00a0million respectively. (2) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
As of 31\u00a0December 2022, the nominal value of asset value guarantees considered as variable considerations under IFRS\u00a015 provided to beneficiaries amounts to \u20ac\u2009247\u00a0million (2021: \u20ac\u2009381\u00a0million), excluding \u20ac\u20099\u00a0million (2021: \u20ac\u20099\u00a0million) where the risk is considered to be remote. The present value of the risk inherent in asset value guarantees where a settlement is being considered probable is fully provided for and included in the total of contract liabilities for an amount of \u20ac\u2009236\u00a0million (2021: \u20ac\u2009345\u00a0million) (see \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
Exposure \u2014 In terms of risk management, the Company manages its gross exposure arising from its sales financing activities (\u201cGross Customer Financing Exposure\u201d) separately for (i)\u00a0customer\u2019s credit risk and (ii)\u00a0asset value risk.
Gross Customer Financing Exposure is the sum of (i)\u00a0the book value of operating leases before impairment, (ii)\u00a0the outstanding principal amount of finance leases or loans due before impairment, (iii)\u00a0the guaranteed amounts under financial guarantees (iv)\u00a0the book value of second hand aircraft for resale before impairment, and (v)\u00a0the outstanding value of any other investment in sales financing structured entities before impairment. This Gross Customer Financing Exposure may differ from the value of related assets on the Company\u2019s Statement of Financial Position and related off-balance sheet contingent commitments, mainly because (i)\u00a0assets are recorded in compliance with IFRS, but may relate to transactions that are financed on a limited recourse basis and (ii)\u00a0the carrying amount of the assets on the Consolidated Statement of Financial Position may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$\u202f0.4\u00a0billion (\u20ac\u20090.3\u2009billion) (2021: US$\u202f0.5\u00a0billion (\u20ac\u20090.4\u00a0billion)).
Net exposure is the difference between Gross Customer Financing Exposure and the collateral value. Collateral value is assessed using a dynamic model based on the net present value of expected future receivables, expected proceeds from resale and potential cost of default. This valuation model yields results that are typically lower than residual value estimates by independent sources in order to allow for what management believes is its conservative assessment of market conditions and for repossession and transformation costs. The net exposure is provided for by way of impairment losses and other provisions.
Impairment losses and provisions \u2014 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\u2019s carrying amount over the higher of the aircraft\u2019s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on\u00a0the 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 \u2014 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\u2019s 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\u00a0December 2022 the carrying amount of its loans from aircraft financing amounts to \u20ac\u200949\u00a0million (2021: \u20ac\u200977\u00a0million). This amount also represents the Company\u2019s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-48": { "value": "As of 31\u00a0December 2022, the nominal value of asset value guarantees considered as variable considerations under IFRS\u00a015 provided to beneficiaries amounts to \u20ac\u2009247\u00a0million (2021: \u20ac\u2009381\u00a0million), excluding \u20ac\u20099\u00a0million (2021: \u20ac\u20099\u00a0million) where the risk is considered to be remote. The present value of the risk inherent in asset value guarantees where a settlement is being considered probable is fully provided for and included in the total of contract liabilities for an amount of \u20ac\u2009236\u00a0million (2021: \u20ac\u2009345\u00a0million) (see \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
Exposure \u2014 In terms of risk management, the Company manages its gross exposure arising from its sales financing activities (\u201cGross Customer Financing Exposure\u201d) separately for (i)\u00a0customer\u2019s credit risk and (ii)\u00a0asset value risk.
Gross Customer Financing Exposure is the sum of (i)\u00a0the book value of operating leases before impairment, (ii)\u00a0the outstanding principal amount of finance leases or loans due before impairment, (iii)\u00a0the guaranteed amounts under financial guarantees (iv)\u00a0the book value of second hand aircraft for resale before impairment, and (v)\u00a0the outstanding value of any other investment in sales financing structured entities before impairment. This Gross Customer Financing Exposure may differ from the value of related assets on the Company\u2019s Statement of Financial Position and related off-balance sheet contingent commitments, mainly because (i)\u00a0assets are recorded in compliance with IFRS, but may relate to transactions that are financed on a limited recourse basis and (ii)\u00a0the carrying amount of the assets on the Consolidated Statement of Financial Position may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$\u202f0.4\u00a0billion (\u20ac\u20090.3\u2009billion) (2021: US$\u202f0.5\u00a0billion (\u20ac\u20090.4\u00a0billion)).
Net exposure is the difference between Gross Customer Financing Exposure and the collateral value. Collateral value is assessed using a dynamic model based on the net present value of expected future receivables, expected proceeds from resale and potential cost of default. This valuation model yields results that are typically lower than residual value estimates by independent sources in order to allow for what management believes is its conservative assessment of market conditions and for repossession and transformation costs. The net exposure is provided for by way of impairment losses and other provisions.
Impairment losses and provisions \u2014 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\u2019s carrying amount over the higher of the aircraft\u2019s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on\u00a0the 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 \u2014 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\u2019s 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\u00a0December 2022 the carrying amount of its loans from aircraft financing amounts to \u20ac\u200949\u00a0million (2021: \u20ac\u200977\u00a0million). This amount also represents the Company\u2019s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-172": { "value": "Contract assets represent the Company\u2019s right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned by something other than the passage of time (e.g. revenue recognised from the application of the PoC method before the Company has a right to invoice).Net contract assets and contract liabilities are determined for each contract separately. For serial contracts, contract liabilities are presented in current contract liabilities, if revenues are expected within the next twelve months or material expenses for the manufacturing process have already occurred. For long-term production contracts (e.g. governmental contracts such as A400M, Tiger, NH90), contract liabilities are classified as current when the relating inventories or receivables are expected to be recognised within the normal operating cycle of the long-term contract.Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Trade receivables arise when the Company provides goods or services directly to a customer with no intention of trading the receivable. Trade receivables include claims arising from revenue recognition that are not yet settled by the debtor. Trade receivables are initially recognised at their transaction prices and are subsequently measured at amortised cost less any allowances for impairment. Gains and losses are recognised in the Consolidated Income Statement when the receivables are derecognised and impaired.Significant changes in contract assets and contract liabilities during the period are as follows:
(In \u20ac million) | 2022 | 2021 | ||
|---|---|---|---|---|
Contract | Contract liabilities | Contract | Contract | |
Revenue recognised that was included in the contract liability\u00a0 | - | (23,494) | - | (19,311) |
Increases due to cash received, excluding amounts recognised as revenue\u00a0(1) | - | 26,797 | - | 17,792 |
Transfers from contract assets recognised at 1\u00a0January | (2,798) | - | (5,765) | - |
Increase as a result of changes in the measure of progress | 3,034 | - | 6,045 | - |
(1) Including final payments received from customers and others parties in anticipation. |
As of 31\u00a0December 2022, trade receivables amounting to \u20ac\u2009301\u00a0million (2021: \u20ac\u2009210\u00a0million) will mature after more than one year.
The respective movement in the allowance for expected credit losses in respect of trade receivables and contract assets during the period was as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Allowance balance at 1\u00a0January | (363) | (306) |
Utilisations / disposals and business combinations | 56 | 47 |
Additions | (73) | (104) |
Allowance balance at 31\u00a0December | (380) | (363) |
Trade liabilities of \u20ac\u200913,261\u00a0million (2021: \u20ac\u20099,693\u00a0million) increased by \u20ac +3,568\u00a0million, mainly driven by higher volume and payment terms increase linked to certain agreements reached with suppliers.
As of 31\u00a0December 2022, trade liabilities amounting to \u20ac\u200986\u00a0million (2021: \u20ac\u200989\u00a0million) will mature after more than one year.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-50": { "value": "Contract liabilities represent the Company\u2019s obligation to transfer goods or services to a customer for which the Company has received consideration, or for which an amount of consideration is due from the customer (e.g. advance payments received).Net contract assets and contract liabilities are determined for each contract separately. For serial contracts, contract liabilities are presented in current contract liabilities, if revenues are expected within the next twelve months or material expenses for the manufacturing process have already occurred. For long-term production contracts (e.g. governmental contracts such as A400M, Tiger, NH90), contract liabilities are classified as current when the relating inventories or receivables are expected to be recognised within the normal operating cycle of the long-term contract.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f8398": { "value": "Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-187": { "value": "Impairment and allowances of trade receivables and contract assets are measured at an amount equal to the life-time expected loss as described in \u201c\u2013 Note\u00a038: Financial Instruments\u201d.Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.
The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.
Investment grade instruments \u2014 The Company considers a significant increase in credit risk to have occurred, if there is a downgrade by four notches such that the instrument moves into a high yield bucket as a direct result of the downgrade. With respect to instruments that were high yield at initial recognition, a downgrade by four notches is considered as a significant increase in credit risk.
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2022 | 12.08 | 20.74 | 18.77 | 51.59 |
Change in financial assets | 3.82 | (5.44) | (1.47) | (3.09) |
Change in risk parameters | 1.32 | (6.95) | 9.41 | 3.78 |
At 31\u00a0December 2022 | 17.22 | 8.35 | 26.71 | 52.28 |
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | 8.09 | 18.26 | 23.42 | 49.77 |
Change in financial assets | 1.91 | (2.17) | (1.77) | (2.03) |
Change in risk parameters | 2.08 | 4.65 | (2.88) | 3.85 |
At 31\u00a0December 2021 | 12.08 | 20.74 | 18.77 | 51.59 |
The following table breaks down the gross carrying amount of loans and receivables as of 31\u00a0December 2022 and 2021, separately showing those that are impaired, renegotiated or past due:
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||||
Trade receivables | 3,727 | 0 | 376 | 373 | 147 | 132 | 99 | 479 | (380) | 4,953 |
Contract assets | 1,528 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1) | 1,527 |
Others | 2,552 | 2 | 93 | 131 | 391 | 116 | 7 | 452 | (188) | 3,556 |
Total | 7,807 | 2 | 469 | 504 | 538 | 248 | 106 | 931 | (569) | 10,036 |
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2021 | ||||||||||
Trade receivables\u00a0(1) | 3,686 | 3 | 356 | 485 | 124 | 207 | 64 | 393 | (361) | 4,957 |
Contract assets | 1,406 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (2) | 1,404 |
Others | 2,301 | 3 | 248 | 68 | 122 | 12 | 29 | 464 | (187) | 3,060 |
Total | 7,393 | 6 | 604 | 553 | 246 | 219 | 93 | 857 | (550) | 9,421 |
(1) 2021 figures restated in accordance with 2022 presentation. |
The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour and analysis of customer credit risk, including underlying customers\u2019 credit ratings if they are available.
The following impairment losses on financial assets are recognised in profit or loss in 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Trade receivables | (65) | (83) |
Contract assets | 0 | (1) |
Total | (65) | (84) |
The Company is exposed to credit risk to the extent of non-performance by either its customers (e.g. airlines) or its counterparts with regard to financial instruments or issuers of financial instruments for gross cash investments. However, it has policies in place to avoid concentrations of credit risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk resulting from financial instruments is managed by the Company. In order to ensure sufficient diversification, a credit limit system is used.
The Company monitors the performance of the individual financial instruments and the impact of market developments on their performance and takes appropriate action on foreseeable adverse development based on pre-defined procedures and escalation levels.
Sales of products and services are made to customers after having conducted appropriate internal credit risk assessment. In order to support sales, primarily at Airbus, Airbus Helicopters and ATR, the Company may agree to participate in customer financing, on a case-by-case basis either directly or through guarantees provided to third parties. In determining the amount and terms of the financing transaction, the Company takes into account the airline\u2019s credit rating and economic factors reflecting the relevant financial market conditions, together with appropriate assumptions as to the anticipated future value of the financed asset.
The booked amount of financial assets represents the maximum credit exposure. The credit quality of financial assets can be assessed by reference to external credit rating (if available) or internal assessment of customers\u2019 creditworthiness e.g. airlines by way of internal risk pricing methods. For further information relating to gross credit risk and impairment see \u201c\u2013 Note\u00a038.7: Impairment Losses\u201d.Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.
The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.
Investment grade instruments \u2014 The Company considers a significant increase in credit risk to have occurred, if there is a downgrade by four notches such that the instrument moves into a high yield bucket as a direct result of the downgrade. With respect to instruments that were high yield at initial recognition, a downgrade by four notches is considered as a significant increase in credit risk.
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2022 | 12.08 | 20.74 | 18.77 | 51.59 |
Change in financial assets | 3.82 | (5.44) | (1.47) | (3.09) |
Change in risk parameters | 1.32 | (6.95) | 9.41 | 3.78 |
At 31\u00a0December 2022 | 17.22 | 8.35 | 26.71 | 52.28 |
(In \u20ac million) | Stage 1 12-month ECL | Stage 2 Life-time ECL | Stage 3 Credit impaired ECL | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | 8.09 | 18.26 | 23.42 | 49.77 |
Change in financial assets | 1.91 | (2.17) | (1.77) | (2.03) |
Change in risk parameters | 2.08 | 4.65 | (2.88) | 3.85 |
At 31\u00a0December 2021 | 12.08 | 20.74 | 18.77 | 51.59 |
The following table breaks down the gross carrying amount of loans and receivables as of 31\u00a0December 2022 and 2021, separately showing those that are impaired, renegotiated or past due:
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||||
Trade receivables | 3,727 | 0 | 376 | 373 | 147 | 132 | 99 | 479 | (380) | 4,953 |
Contract assets | 1,528 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1) | 1,527 |
Others | 2,552 | 2 | 93 | 131 | 391 | 116 | 7 | 452 | (188) | 3,556 |
Total | 7,807 | 2 | 469 | 504 | 538 | 248 | 106 | 931 | (569) | 10,036 |
(In \u20ac million) | Not past due | Renegotiated/ | Gross impaired | Past due | Past due | Past due | Past due | Past due | Impairment | Total |
|---|---|---|---|---|---|---|---|---|---|---|
31\u00a0December 2021 | ||||||||||
Trade receivables\u00a0(1) | 3,686 | 3 | 356 | 485 | 124 | 207 | 64 | 393 | (361) | 4,957 |
Contract assets | 1,406 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (2) | 1,404 |
Others | 2,301 | 3 | 248 | 68 | 122 | 12 | 29 | 464 | (187) | 3,060 |
Total | 7,393 | 6 | 604 | 553 | 246 | 219 | 93 | 857 | (550) | 9,421 |
(1) 2021 figures restated in accordance with 2022 presentation. |
The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour and analysis of customer credit risk, including underlying customers\u2019 credit ratings if they are available.
The following impairment losses on financial assets are recognised in profit or loss in 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Trade receivables | (65) | (83) |
Contract assets | 0 | (1) |
Total | (65) | (84) |
Financial assets at amortised cost \u2014 This category comprises assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. It includes trade receivables.
Financial assets at fair value through OCI \u2014 This category comprises:
Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).
The Company assigns its financial instruments into classes based on their balance sheet category.Loss allowances \u2014 For its portfolio of debt instruments including bonds, term deposits and commercial papers, the Company measures loss allowances at an amount that represents credit losses resulting from default events that are possible within the next 12\u00a0months, unless the credit risk on a financial instrument has increased significantly since initial recognition. In the event of such significant increase in credit risk the Company measures loss allowances for that financial instrument at an amount equal to its life-time expected losses, i.e. at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument.The Company applies the low credit risk exemption allowing the Company to assume that there is no significant increase in credit risk since initial recognition of a financial instrument, if the instrument is determined to have low credit risk at the reporting date. Similarly, the Company has determined that its trade receivables and contract assets generally have low credit risk. The Company applies the simplified approach permitted by IFRS\u00a09 of measuring expected credit losses of trade receivables and contract assets on a lifetime basis from initial recognition.Investment grade instruments \u2014 The Company considers a significant increase in credit risk to have occurred, if there is a downgrade by four notches such that the instrument moves into a high yield bucket as a direct result of the downgrade. With respect to instruments that were high yield at initial recognition, a downgrade by four notches is considered as a significant increase in credit risk.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-PaDTNf-192": { "value": "Contingent assets and contingent liabilities \u2014 The Company is exposed to technical and commercial contingent obligations due to the nature of its businesses. To mitigate this exposure, the Company has subscribed a Global Aviation Insurance Programme (\u201cGAP\u201d). Information required under IAS\u00a037 \u201cProvisions, Contingent Assets and Contingent Liabilities\u201d is not disclosed if the Company concludes that disclosure can be expected to prejudice seriously its position in a dispute with other parties.For other contingent liabilities, see \u201c\u2013 Note\u00a039: Litigation and Claims\u201d and \u201c\u2013 Note\u00a013: Revenue and Gross Margin\u201d (mainly A400M programme).Litigation and claims \u2014 Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the future against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with certainty. Provisions have been accounted for in accordance with IFRS criteria. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established provisions over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term \u201creasonably possible\u201d is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely.
The Company is involved from time to time in various governmental, legal and arbitration proceedings in the ordinary course of its business, the most significant of which are described below. Other than as described below, there are no material governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have or have had in the recent past significant effects on Airbus SE\u2019s or the Company\u2019s Financial Position or profitability.
If the Company concludes that the disclosures relative to contingent liabilities can be expected to prejudice seriously its position in a dispute with other parties, the Company limits its disclosures to the nature of the dispute.
The Company reached final agreements (\u201cthe agreements\u201d) with the French Parquet National Financier (\u201cPNF\u201d), the UK Serious Fraud Office (\u201cSFO\u201d), and the US Department of Justice (\u201cDoJ\u201d) resolving the authorities\u2019 investigations into allegations of bribery and corruption, as well as with the US Department of State (\u201cDoS\u201d) and the DoJ to resolve their investigations into inaccurate and misleading filings made with the DoS pursuant to the US International Traffic in Arms Regulations (\u201cITAR\u201d). The agreements were approved and made public on 31\u00a0January 2020.
Under the terms of the agreements, the Company agreed to pay penalties of \u20ac\u20093,597,766,766 plus interest and costs to the French, UK and US authorities. This was recognised in the Company\u2019s 2019 accounts. The settlements with each authority were as follows: PNF \u20ac\u20092,083,137,455, the SFO \u20ac\u2009983,974,311, the DoJ \u20ac\u2009526,150,496 and the DoS \u20ac\u20099,009,008 of which \u20ac\u20094,504,504\u00a0May be used for approved remedial compliance measures. All penalties have been paid.
Under the terms of the Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF, the Company has an obligation to submit its compliance programme to targeted audits carried out by the Agence Fran\u00e7aise Anticorruption (\u201cAFA\u201d) over a period of three years.
Under the terms of the Deferred Prosecution Agreement (\u201cDPA\u201d) with the SFO, no independent compliance monitor will be imposed on the Company in light of the continuing monitorship to be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent compliance monitor will be imposed on Airbus under the agreement with the DoJ, but the Company will periodically report on its continuing compliance enhancement progress during the three year term of the DPA and carry out further reviews as required by the DoJ.
The agreements resulted in the suspension of prosecution for a duration of three years. This deferral period ended on 31\u00a0January 2023. The Company awaits the formal determination by the authorities that it has complied with the agreements\u2019 terms throughout the period whereupon it expects the closure of the prosecutions in line with the procedural requirements of each country.
Under the terms of the Consent Agreement with the DoS, the DoS has agreed to settle all civil violations of the ITAR outlined in the Company\u2019s voluntary disclosures identified in the Consent Agreement, and the Company has agreed to retain an independent export control compliance officer, who will monitor the effectiveness of the Company\u2019s export control systems and its compliance with the ITAR for a duration of three years.
As a result of the Company\u2019s decision to redirect export control compliance resources to ensure compliance with export control restrictions and international sanctions announced against Russia, Belarus and certain Russian entities and individuals following Russia\u2019s invasion of Ukraine on 24\u00a0February 2022, the Company asked the DoS to extend the Consent Agreement by nine months. The DoS has granted the extension. The Company does not expect the Consent Agreement extension to have an impact on the DPAs with the SFO and DoJ, nor on the CJIP with the PNF, nor on the AFA\u2019s monitorship, as those are independent of the DoS\u2019s civil compliance programme review.
Any breach of the terms of the agreements by the Company could lead to rescission by the authorities of the terms of the agreements and reopening of the prosecutions. Prosecution could result in the imposition of further monetary penalties or other sanctions including additional tax liability and could have a material impact on the Financial Statements, business and operations of the Company.
In addition to any pending investigation in other jurisdictions, the factual disclosures made in the course of reaching the agreements may result in the commencement of additional investigations in other jurisdictions. Such investigations could also result in (i)\u00a0civil claims or claims by shareholders against the Company, (ii)\u00a0adverse consequences on the Company\u2019s ability to obtain or continue financing for current or future projects, (iii)\u00a0limitations on the eligibility of group companies for certain public sector contracts, and/or (iv)\u00a0damage to the Company\u2019s business or reputation via negative publicity adversely affecting the Company\u2019s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future, pursuant to the agreements and to enhance its strong Ethics & Compliance culture within the Company.
Several consultants and other third parties have initiated commercial litigation and arbitration against the Company seeking relief. The agreements reached with authorities may lead to additional commercial litigation and arbitration against the Company and tax liability in the future, which could have a material impact on the Financial Statements, business and operations of the Company.
In August\u00a02020, a putative class action lawsuit was filed in US federal court in the state of New Jersey against Airbus\u00a0SE and members of its current and former management. The Company was served with the complaint in the fourth quarter of 2021. The lawsuit was brought on behalf of alleged shareholders that purchased or otherwise acquired Airbus\u00a0SE securities in the US between 24\u00a0February 2016 and 30\u00a0July 2020, and asserted violations of US securities laws. The complaint alleged that defendants made false and misleading statements or omissions concerning, among other things, the Company\u2019s agreements approved on 31\u00a0January 2020 with the French PNF, the UK SFO, the US DoJ and the US DoS as well as the Company\u2019s historic practices regarding the use of third party business partners and anti-corruption compliance. The matter was fully and finally settled on 30\u00a0September 2022 in exchange for a payment in the amount of $5,000,000 USD without any acknowledgement of liability.
In addition, the Company received notification in August\u00a02021 of two separate claims and in March\u00a02022 of a third claim, all alleging similar facts as the US class action. Three claims have been filed in the Netherlands purportedly on behalf of Airbus investors.
The first Dutch claim was filed in August\u00a02021 by a special purpose vehicle incorporated under the laws of Guernsey, an assignee purportedly representing numerous private shareholders and institutional investors, seeking a declaratory judgment with damages to be assessed in follow on proceedings. This claim is now pending before the Amsterdam District Court.
The second Dutch claim was filed in December\u00a02021 following a demand letter sent by a foundation incorporated under the laws of the Netherlands, a purported representative of unnamed institutional and retail investors worldwide, starting a class action against the Company before the Dutch courts. This second Dutch claim targets the Company, certain of the Company\u2019s current and former directors and officers, and the Company\u2019s current and former auditors.
The third Dutch claim was a class action filed in April\u00a02022 against the Company by a foundation incorporated under the laws of the Netherlands. In accordance with Dutch procedural law, the two Dutch class action claims are treated jointly as one case.
The Dutch claims allege that the Company violated its reporting obligations by failing to adequately inform investors and providing false or misleading information about its use of intermediaries and alleged corrupt practices, its related financial exposure, internal investigations and subsequent measures taken by the Company, and related criminal investigations, which allegedly impacted the Company\u2019s share price.
The Company cannot exclude the possibility that additional claims are filed related to this subject matter attempting different theories of recovery in the same or different jurisdictions.
The Company believes it has solid grounds to defend itself against the allegations. The consequences of such litigation and the outcome of the proceedings cannot be fully assessed at this stage, but any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company.
On 1\u00a0June 2009, an A330 operated by Air France flight AF447 from Rio de Janeiro to Paris disappeared over the Atlantic Ocean with 228 persons onboard. The wreckage was located in April\u00a02011 after several search campaigns organised by the Bureau d\u2019Enqu\u00eates et d\u2019Analyses (BEA), which published its final investigation report in July\u00a02012. In the wake of the accident, the prosecutor in Paris opened an investigation for involuntary manslaughter and Airbus\u00a0SAS was charged in March\u00a02011. In September\u00a02019, the investigating magistrates closed the investigation and dismissed all criminal charges after a thorough analysis of the technical and legal elements of the case. However, the Paris Court of Appeal overturned the magistrates\u2019 decision and ordered trial for involuntary manslaughter. The Company\u2019s appeal to the French Supreme Court has been dismissed. The trial took place in the fourth quarter of 2022. The prosecutor recommended a dismissal of all criminal charges against Air France and Airbus. The judgment of the Paris Criminal Court expected on 17\u00a0April 2023, if unfavourable to the Company, could result in damage to its business or reputation.
Citing surface degradation on some of its A350 fleet and alleging an underlying \u201cdesign defect\u201d, Qatar Airways filed a legal claim against the Company in the London Commercial Court on 17\u00a0December 2021. On 1\u00a0February 2023, the parties announced they had reached an amicable and mutually agreeable settlement in relation to their legal dispute over A350 surface degradation and the grounding of A350 aircraft. The parties have proceeded to discontinue their legal claims. The settlement agreement is not an admission of liability for either party. The parties have also agreed terms for the delivery of 50 A321 and 23 A350 aircraft.
On 10\u00a0February 2018, a fatal accident occurred in the Grand Canyon at a site called Quartermaster in Arizona involving an EC130 B4 helicopter operated by Papillon Helicopters impacting the canyon floor and catching fire, leading to five fatalities and two severely injured persons. Following the accident, product liability claims were filed in Nevada state court in the US, including claims by the estate and parents of a deceased passenger and by the injured pilot of the helicopter. The Company intends to vigorously defend itself against the claims, but such claims may generate negative publicity and reputational harm. The trial is scheduled to take place in the first quarter of 2024. Any judgment or decision unfavourable to the Company could have a material adverse impact on the Financial Statements, business and operations of the Company as well as on its reputation.
The Company cooperated fully with the authorities in relation to three investigations initiated by independent magistrates in France concerning the activities of commercial intermediaries in Libya, Kazakhstan, Kuwait and several Eastern European countries. In recognition of the fulsome nature of the cooperation and upon payment of a penalty of \u20ac\u200915.8\u00a0million, all three investigations were closed by means of a Convention judiciaire d\u2019int\u00e9r\u00eat public (\u201cCJIP\u201d) with the PNF on 30\u00a0November 2022. This ends all remaining prosecutions in France for similar historical activities.
In 2019, the Company self-reported to German authorities potentially improper advance receipt and communication of confidential customer information by employees of Airbus Defence and Space\u00a0GmbH. The information concerned relates to future German government procurement projects. The self-disclosure by the Company followed an internal review with the support of an external law firm. Both the German Ministry of Defence and the Munich public prosecutor opened an investigation into the matter. The investigation could have an impact on Airbus Defence and Space GmbH\u2019s and Airbus Secure Land Communications GmbH\u2019s ability to participate in future public procurement projects in Germany. In 2021 the Munich prosecution issued a penalty notice against Airbus Defence and Space\u00a0GmbH for \u20ac\u200910\u00a0million for negligent violation of supervisory duties in connection with this matter. The Company continues to fully cooperate with relevant authorities.", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f9222": { "value": "(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cost to fulfil a contract | 337 | 301 |
Prepaid expenses | 149 | 116 |
Others | 1,386 | 484\u00a0(1) |
Total non-current other assets | 1,872 | 901 |
Value added tax claims | 1,732 | 1,183 |
Cost to fulfil a contract | 448 | 499 |
Prepaid expenses | 161 | 392 |
Others | 509 | 319 |
Total current other assets | 2,850 | 2,393 |
Total | 4,722 | 3,294 |
(1) 2021 figures restated in accordance with 2022 presentation. |
As of 31\u00a0December 2022, non-current other assets include\u00a0\u20ac\u2009673\u00a0million of payments to be made to Airbus by suppliers after aircraft delivery (2021: \u20ac\u2009411\u00a0million). They are recorded as a reduction of cost of goods sold at the time of aircraft delivery. These future payments are discounted to reflect specific contractual terms and repayment profile.
As of 31\u00a0December 2022, a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK as a consequence of the increased discount rates (see \u201c\u2013 Note\u00a025: Provisions\u201d).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f9223": { "value": "(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cost to fulfil a contract | 337 | 301 |
Prepaid expenses | 149 | 116 |
Others | 1,386 | 484\u00a0(1) |
Total non-current other assets | 1,872 | 901 |
Value added tax claims | 1,732 | 1,183 |
Cost to fulfil a contract | 448 | 499 |
Prepaid expenses | 161 | 392 |
Others | 509 | 319 |
Total current other assets | 2,850 | 2,393 |
Total | 4,722 | 3,294 |
(1) 2021 figures restated in accordance with 2022 presentation. |
As of 31\u00a0December 2022, non-current other assets include\u00a0\u20ac\u2009673\u00a0million of payments to be made to Airbus by suppliers after aircraft delivery (2021: \u20ac\u2009411\u00a0million). They are recorded as a reduction of cost of goods sold at the time of aircraft delivery. These future payments are discounted to reflect specific contractual terms and repayment profile.
As of 31\u00a0December 2022, a non-current asset of \u20ac\u20090.6\u00a0billion has been accounted for to reflect the surplus in two pension funds in the UK as a consequence of the increased discount rates (see \u201c\u2013 Note\u00a025: Provisions\u201d).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-56": { "value": "(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cost to fulfil a contract | 337 | 301 |
Prepaid expenses | 149 | 116 |
Others | 1,386 | 484\u00a0(1) |
Total non-current other assets | 1,872 | 901 |
Value added tax claims | 1,732 | 1,183 |
Cost to fulfil a contract | 448 | 499 |
Prepaid expenses | 161 | 392 |
Others | 509 | 319 |
Total current other assets | 2,850 | 2,393 |
Total | 4,722 | 3,294 |
(1) 2021 figures restated in accordance with 2022 presentation. |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Others | 498 | 583 |
Total non-current other liabilities | 498 | 583 |
Tax liabilities (excluding income tax) | 1,082 | 771 |
Others | 2,721 | 2,761 |
Total current other liabilities | 3,803 | 3,532 |
Total | 4,301 | 4,115 |
thereof other liabilities due within 1\u00a0year | 3,803 | 3,532 |
As of 31\u00a0December 2022, current other liabilities mainly comprise tax (excluding income tax) and personnel liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f9336": { "value": "
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Others | 498 | 583 |
Total non-current other liabilities | 498 | 583 |
Tax liabilities (excluding income tax) | 1,082 | 771 |
Others | 2,721 | 2,761 |
Total current other liabilities | 3,803 | 3,532 |
Total | 4,301 | 4,115 |
thereof other liabilities due within 1\u00a0year | 3,803 | 3,532 |
As of 31\u00a0December 2022, current other liabilities mainly comprise tax (excluding income tax) and personnel liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-57": { "value": "
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Others | 498 | 583 |
Total non-current other liabilities | 498 | 583 |
Tax liabilities (excluding income tax) | 1,082 | 771 |
Others | 2,721 | 2,761 |
Total current other liabilities | 3,803 | 3,532 |
Total | 4,301 | 4,115 |
thereof other liabilities due within 1\u00a0year | 3,803 | 3,532 |
As of 31\u00a0December 2022, current other liabilities mainly comprise tax (excluding income tax) and personnel liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f9418": { "value": "
Sales financing \u2014 With a view to facilitating aircraft sales for Airbus and Airbus Helicopters, the Company may enter into either on-balance sheet or off-balance sheet sales financing transactions.
On-balance sheet transactions where the Company is lessor are classified as operating leases, finance leases and loans, inventories and to a minor extent, equity investments:
Off-balance sheet commitments \u2014 Financing commitments are provided to the customer either as backstop commitments before delivery, asset value guarantees at delivery or counter guarantees:
As of 31\u00a0December 2022, the nominal value of asset value guarantees considered as variable considerations under IFRS\u00a015 provided to beneficiaries amounts to \u20ac\u2009247\u00a0million (2021: \u20ac\u2009381\u00a0million), excluding \u20ac\u20099\u00a0million (2021: \u20ac\u20099\u00a0million) where the risk is considered to be remote. The present value of the risk inherent in asset value guarantees where a settlement is being considered probable is fully provided for and included in the total of contract liabilities for an amount of \u20ac\u2009236\u00a0million (2021: \u20ac\u2009345\u00a0million) (see \u201c\u2013 Note\u00a023: Contract Assets, Contract Liabilities and Trade Receivables, and Trade Liabilities\u201d).
Exposure \u2014 In terms of risk management, the Company manages its gross exposure arising from its sales financing activities (\u201cGross Customer Financing Exposure\u201d) separately for (i)\u00a0customer\u2019s credit risk and (ii)\u00a0asset value risk.
Gross Customer Financing Exposure is the sum of (i)\u00a0the book value of operating leases before impairment, (ii)\u00a0the outstanding principal amount of finance leases or loans due before impairment, (iii)\u00a0the guaranteed amounts under financial guarantees (iv)\u00a0the book value of second hand aircraft for resale before impairment, and (v)\u00a0the outstanding value of any other investment in sales financing structured entities before impairment. This Gross Customer Financing Exposure may differ from the value of related assets on the Company\u2019s Statement of Financial Position and related off-balance sheet contingent commitments, mainly because (i)\u00a0assets are recorded in compliance with IFRS, but may relate to transactions that are financed on a limited recourse basis and (ii)\u00a0the carrying amount of the assets on the Consolidated Statement of Financial Position may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$\u202f0.4\u00a0billion (\u20ac\u20090.3\u2009billion) (2021: US$\u202f0.5\u00a0billion (\u20ac\u20090.4\u00a0billion)).
Net exposure is the difference between Gross Customer Financing Exposure and the collateral value. Collateral value is assessed using a dynamic model based on the net present value of expected future receivables, expected proceeds from resale and potential cost of default. This valuation model yields results that are typically lower than residual value estimates by independent sources in order to allow for what management believes is its conservative assessment of market conditions and for repossession and transformation costs. The net exposure is provided for by way of impairment losses and other provisions.
Impairment losses and provisions \u2014 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\u2019s carrying amount over the higher of the aircraft\u2019s value in use and its fair value less cost to sell. Finance leases and loans are measured at fair value, based on\u00a0the 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 \u2014 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\u2019s 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\u00a0December 2022 the carrying amount of its loans from aircraft financing amounts to \u20ac\u200949\u00a0million (2021: \u20ac\u200977\u00a0million). This amount also represents the Company\u2019s maximum exposure to loss from its interest in unconsolidated aircraft financing structured entities.
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\u00a0December 2022 and 31\u00a0December 2021 are as follows:
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2022 | 130 | 62 |
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2021 | 126 | 65 |
Direct customer financing cash flows amount to \u20ac\u2009-146\u00a0million in 2022 (2021: \u20ac\u200928\u00a0million).
The on-balance sheet assets relating to sales financing, the off-balance sheet commitments and the related financing exposure (not including asset value guarantees) as of 31\u00a0December 2022 and 2021 are as follows:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Airbus | Airbus Helicopters | Total | Airbus | Airbus Helicopters | Total | |
Operating leases\u00a0(1) | 102 | 0 | 102 | 105 | 13 | 118 |
Finance leases and loans | 101 | 31 | 132 | 145 | 19 | 164 |
Inventories | 37 | 0 | 37 | 11 | 0 | 11 |
Other investments | 66 | 0 | 66 | 62 | 0 | 62 |
On-balance sheet customer financing | 306 | 31 | 337 | 323 | 32 | 355 |
Off-balance sheet customer financing | 6 | 2 | 8 | 41 | 26 | 67 |
Gross Customer Financing Exposure | 312 | 33 | 345 | 364 | 58 | 422 |
Collateral values | (262) | (33) | (295) | (282) | (58) | (340) |
Net exposure | 50 | 0 | 50 | 82 | 0 | 82 |
Operating leases | 0 | 0 | 0 | (7) | 0 | (7) |
Finance leases and loans | (40) | 0 | (40) | (53) | 0 | (53) |
On-balance sheet commitments - inventories | (5) | 0 | (5) | (6) | 0 | (6) |
Off-balance sheet commitments - provisions\u00a0(2) | (5) | 0 | (5) | (16) | 0 | (16) |
Asset impairments, fair value adjustments\u00a0 | (50) | 0 | (50) | (82) | 0 | (82) |
(1) For 2022 and 2021, depreciation amounts to \u20ac\u200911\u00a0million and \u20ac\u20091\u00a0million respectively and related accumulated depreciation is \u20ac\u200914\u00a0million and \u20ac\u20098\u00a0million respectively. (2) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
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\u00a0December 2022 and 31\u00a0December 2021 are as follows:
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2022 | 130 | 62 |
(In \u20ac million) | Aircraft under | Finance lease receivables |
|---|---|---|
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\u00a0December 2021 | 126 | 65 |
Direct customer financing cash flows amount to \u20ac\u2009-146\u00a0million in 2022 (2021: \u20ac\u200928\u00a0million).
The on-balance sheet assets relating to sales financing, the off-balance sheet commitments and the related financing exposure (not including asset value guarantees) as of 31\u00a0December 2022 and 2021 are as follows:
(In \u20ac million) | 31\u00a0December 2022 | 31 December 2021 | ||||
|---|---|---|---|---|---|---|
Airbus | Airbus Helicopters | Total | Airbus | Airbus Helicopters | Total | |
Operating leases\u00a0(1) | 102 | 0 | 102 | 105 | 13 | 118 |
Finance leases and loans | 101 | 31 | 132 | 145 | 19 | 164 |
Inventories | 37 | 0 | 37 | 11 | 0 | 11 |
Other investments | 66 | 0 | 66 | 62 | 0 | 62 |
On-balance sheet customer financing | 306 | 31 | 337 | 323 | 32 | 355 |
Off-balance sheet customer financing | 6 | 2 | 8 | 41 | 26 | 67 |
Gross Customer Financing Exposure | 312 | 33 | 345 | 364 | 58 | 422 |
Collateral values | (262) | (33) | (295) | (282) | (58) | (340) |
Net exposure | 50 | 0 | 50 | 82 | 0 | 82 |
Operating leases | 0 | 0 | 0 | (7) | 0 | (7) |
Finance leases and loans | (40) | 0 | (40) | (53) | 0 | (53) |
On-balance sheet commitments - inventories | (5) | 0 | (5) | (6) | 0 | (6) |
Off-balance sheet commitments - provisions\u00a0(2) | (5) | 0 | (5) | (16) | 0 | (16) |
Asset impairments, fair value adjustments\u00a0 | (50) | 0 | (50) | (82) | 0 | (82) |
(1) For 2022 and 2021, depreciation amounts to \u20ac\u200911\u00a0million and \u20ac\u20091\u00a0million respectively and related accumulated depreciation is \u20ac\u200914\u00a0million and \u20ac\u20098\u00a0million respectively. (2) See \u201c\u2013 Note\u00a025: Provisions, Contingent Assets and Contingent Liabilities\u201d. |
Airbus | Airbus | Airbus Defence and Space | Consolidated Airbus | |
|---|---|---|---|---|
31\u00a0December 2022 | 79,134 | 20,803 | 34,330 | 134,267 |
31\u00a0December 2021 | 73,560 | 20,126 | 32,809 | 126,495 |
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Wages, salaries and social contributions | 13,509 | 12,913 |
Net periodic pension cost\u00a0(1) | 136 | 356 |
Total | 13,645 | 13,269 |
(1) See \u201c\u2013 Note\u00a032: Post-Employment Benefits\u201d. |
In 2022, personnel expenses include\u00a0\u20ac\u20090.3\u00a0billion of\u00a0exceptional premiums granted to Airbus employees in the context of elevated inflation.
Several German companies provide life-time working account models, being employee benefit plans with a promised return on contributions or notional contributions that qualify as other long-term employee benefits under IAS\u00a019. The employees\u2019 periodical contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in other personnel charges.
(In \u20ac million) | Balance at | Exchange differences | Increase from passage of time | Additions | Reclassification / Change in consolidated group | Used | Released | Balance at 31\u00a0December |
|---|---|---|---|---|---|---|---|---|
Restructuring measures /\u00a0 | 125 | 2 | 0 | 34 | (6) | (55) | (9) | 91 |
Other personnel charges | 644 | (1) | 2 | 387 | (19) | (309) | (52) | 652 |
Total | 769 | 1 | 2 | 421 | (25) | (364) | (61) | 743 |
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for retirement plans | 3,302 | 6,240 |
Provisions for deferred compensation | 207 | 832 |
Retirement plans and similar obligations | 3,509 | 7,072 |
In addition, as a consequence of the increased discount rates a non-current asset of \u20ac\u2009642\u00a0million has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.
The Defined Benefit Obligation (\u201cDBO\u201d) exposes the Company to actuarial risks, including mainly the following ones:
Market price risk \u2014 The return on plan assets is assumed to be the discount rate derived from AA-rated corporate bonds. If the actual return rate of plan assets is lower than the applied discount rate, the net liability increases accordingly. Moreover, the market values of the plan assets are subject to volatility, which also impacts the net liability.
Interest rate risk \u2014 The level of the DBO is significantly impacted by the applied discount rate. The low interest rates in recent years, particular in the euro-denominated market environment, lead to a relatively high net pension liability. If there is again a decline in returns of corporate bonds, the DBO will increase in future periods, which might only be offset partially by the positive development of market values of those corporate bonds included in plan assets. Generally, the pension obligation is sensitive to movements in the interest rate leading to volatile results in the valuation.
Inflation risk \u2014 The pension liabilities can be sensitive to movements in the inflation rate, whereby a higher inflation rate could lead to an increasing liability. Since some pension plans are directly related to salaries, increases in compensations could result in increasing pension obligations. For the deferred compensation plan P3, which is financed by the employees a fixed interest rate has been agreed.
Longevity risk \u2014 The pension liabilities are sensitive to the life expectancy of its members. Rising life expectancies lead to an increase in the valuation of the DBO.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.
The development of the provision for retirement and deferred compensation plans is set out below:
(In \u20ac million) | DBO | Plan assets | Total provisions | ||||
|---|---|---|---|---|---|---|---|
Pension plans of | Participation in | Total | Pension plans of | Participation in | Total | ||
Balance at 1 January 2021 | 18,778 | 4,370 | 23,148 | (9,896) | (3,272) | (13,168) | 9,980 |
Service cost (including past service cost) | 225 | 66 | 291 | 0 | 0 | 0 | 291 |
Interest cost and income | 118 | 61 | 179 | (69) | (45) | (114) | 65 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 48 | (6) | 42 | 0 | 0 | 0 | 42 |
changes in financial assumptions | (1,378) | (75) | (1,453) | 0 | 0 | 0 | (1,453) |
changes in experience adjustments | 95 | 44 | 139 | 0 | 0 | 0 | 139 |
plan assets | 0 | 0 | 0 | (954) | (387) | (1,341) | (1,341) |
Changes in consolidation, transfers and others | (12) | 0 | (12) | (14) | 0 | (14) | (26) |
Benefits paid | (455) | (167) | (622) | 156 | 167 | 323 | (299) |
Contributions by employer and other plan participants | 117 | 1 | 118 | (442) | (97) | (539) | (421) |
Foreign currency translation adjustments | 163 | 304 | 467 | (134) | (238) | (372) | 95 |
Balance at 31 December 2021 | 17,699 | 4,598 | 22,297 | (11,353) | (3,872) | (15,225) | 7,072 |
Service cost (including past service cost) | (25) | 72 | 47 | 0 | 0 | 0 | 47 |
Interest cost and income | 217 | 85 | 302 | (141) | (72) | (213) | 89 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 141 | (3) | 138 | 0 | 0 | 0 | 138 |
changes in financial assumptions | (5,246) | (2,056) | (7,302) | 0 | 0 | 0 | (7,302) |
changes in experience adjustments | 613 | 370 | 983 | 0 | 0 | 0 | 983 |
plan assets | 0 | 0 | 0 | 1,911 | 740 | 2,651 | 2,651 |
Changes in consolidation, transfers and others | (34) | 0 | (34) | 9 | 0 | 9 | (25) |
Benefits paid | (442) | (121) | (563) | 159 | 121 | 280 | (283) |
Contributions by employer and other plan participants | 80 | 1 | 81 | (348) | (254) | (602) | (521) |
Foreign currency translation adjustments | (67) | (178) | (245) | 80 | 183 | 263 | 18 |
Balance at 31 December 2022 | 12,936 | 2,768 | 15,704 | (9,683) | (3,154) | (12,837) | 2,867 |
The figures shown in the table include the surplus in two pension funds in the UK, resulting from a defined benefit obligation and assets of \u20ac\u20093,867\u00a0million and \u20ac\u20094,509\u00a0million that have been accounted as a non-current asset.
In the figures shown in the table, amounts of \u20ac\u20091,715\u00a0million and \u20ac\u20091,508\u00a0million are included for the defined benefit obligation and plan assets for deferred compensation plans in Germany (2021: \u20ac\u20092,503\u00a0million and \u20ac\u20091,682\u00a0million).
The past service cost included in the service cost amounts to \u20ac\u2009-400\u00a0million and \u20ac -228\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The employer contributions amount to \u20ac\u2009595\u00a0million and \u20ac\u20096\u00a0million for other plan participants as of 31\u00a0December 2022 (2021: \u20ac\u2009533\u00a0million and \u20ac\u20096\u00a0million respectively).
Additionally, the Company considers liabilities for lump sum payments (one-off payment or lump sum instalments) under the German P3 and APP pension arrangements in the total amount of \u20ac\u2009183\u00a0million and \u20ac\u2009172\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
The funding of the plans is as follows:
(In \u20ac million) | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
DBO | Plan assets | DBO | Plan assets | |
Unfunded pension plans | 873 | 0 | 1,406 | 0 |
Funded pension plans (partial) | 14,831 | (12,837) | 20,891 | (15,225) |
Total | 15,704 | (12,837) | 22,297 | (15,225) |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
In 2022, contributions for retirement and deferred compensation plans amount to \u20ac\u2009601\u00a0million. This mainly consists of:
Contributions of approximately \u20ac\u2009700\u00a0million are expected to be made in 2023.
The weighted average duration of the DBO for retirement plans and deferred compensation is 15\u00a0years at 31\u00a0December 2022 (31\u00a0December 2021: 18\u00a0years).
The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for the most significant plans is as follows:
Active | Deferred | Pensioner | |
|---|---|---|---|
Germany | 43% | 10% | 47% |
France | 99% | 0% | 1% |
UK | 63% | 16% | 21% |
Participation in BAE System Pension Scheme (Main Scheme) | 35% | 15% | 50% |
Canada | 82% | 2% | 16% |
The split of the present value of DBO for retirement plans and deferred compensation for the most significant plans is as follows:
Present value of DBO | Plan assets | |||
|---|---|---|---|---|
Retirement plans | Deferred Compensation plans | Retirement plans | Deferred Compensation plans | |
Germany | 83% | 17% | 81% | 19% |
France | 100% | 0% | 100% | 0% |
UK | 100% | 0% | 100% | 0% |
Participation in BAE System Pension Scheme (Main Scheme) | 100% | 0% | 100% | 0% |
Canada | 100% | 0% | 100% | 0% |
The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
(In \u20ac million) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Quoted prices | Unquoted prices | Total | Quoted prices | Unquoted prices | Total | |
Equity securities | ||||||
Europe | 565 | 0 | 565 | 1,539 | 0 | 1,539 |
Rest of the world | 128 | 0 | 128 | 408 | 0 | 408 |
Emerging markets | 417 | 0 | 417 | 561 | 0 | 561 |
Global | 1,959 | 898 | 2,857 | 2,896 | 693 | 3,589 |
Bonds | ||||||
Corporates | 2,502 | 1,114 | 3,616 | 3,125 | 283 | 3,408 |
Governments | 2,370 | 0 | 2,370 | 2,393 | 0 | 2,393 |
Pooled investments vehicles | 725 | 0 | 725 | 328 | 0 | 328 |
Commodities | 0 | 0 | 0 | 0 | 0 | 0 |
Hedge funds | 0 | 0 | 0 | 0 | 459 | 459 |
Derivatives | 0 | (278) | (278) | 0 | (71) | (71) |
Property | 0 | 767 | 767 | 0 | 723 | 723 |
Cash and money market funds | 202 | 144 | 346 | 344 | 263 | 607 |
Others | 0 | 1,324 | 1,324 | 0 | 1,281 | 1,281 |
Balance at 31 December | 8,868 | 3,969 | 12,837 | 11,594 | 3,631 | 15,225 |
The majority of funded plans apply broadly an asset-liability matching framework. The strategic asset allocation of the plans takes into account the characteristics of the underlying obligations. Investments are widely diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2022 consists of fixed income and equity instruments, although the Company also invests in property, commodities and hedge funds. The Company reassesses the characteristics of the pension obligations from time to time or as required by the applicable regulation or governance framework. This typically triggers a subsequent review of the strategic asset allocation.
The amount recorded as provision for retirement and deferred compensation plans can be allocated to the countries as follows:
(In \u20ac million) | Pension plans of the Company | Participation in BAE Systems Pension Scheme in the UK | Total | |||
|---|---|---|---|---|---|---|
Germany | France | UK | Canada | |||
DBO | 10,157 | 1,243 | 1,100 | 436 | 2,768 | 15,704 |
Plan assets | 7,957 | 19 | 1,356 | 351 | 3,154 | 12,837 |
Recognised at 31 December 2022 | 2,200 | 1,224 | (256) | 85 | (386) | 2,867 |
DBO | 13,330 | 1,941 | 1,858 | 570 | 4,598 | 22,297 |
Plan assets | 9,063 | 21 | 1,858 | 411 | 3,872 | 15,225 |
Recognised at 31 December 2021 | 4,267 | 1,920 | 0 | 159 | 726 | 7,072 |
Share-based compensation \u2014 Since 2016, the Company operates a Performance Units and Performance Shares Plan. Performance Units qualify as a cash-settled share based payment plan under IFRS\u00a02 and Performance Shares qualify as anequity-settled share-based payment plan under IFRS\u00a02.
Since 2021, the Company operates only a Performance Shares Plan.
Plans granting Restricted Units, Performance Units and/or Performance Shares are also mentioned as \u201cLTIP\u201d in the following notes.
Since 2018, the Company operates also exceptional grants of Performance and Restricted Units as well as Performance and Restricted Shares under an Equity Pool. Such exceptional grants are validated by specific resolutions from the Board of Directors and qualify as cash-settled or equity-settled share-based payment plans under IFRS\u00a02. Accounting principles and methodology are the ones applied for LTIP as described below.
For cash-settled plans, provisions for associated services received are measured at fair value by multiplying the number of units expected to vest with the fair value of one LTIP unit at the end of each reporting period, taking into account the extent to which the employees have rendered service to date. Changes of the fair value are recognised as personnel expenses of the period, leading to a re-measurement of the provision. The fair value of Performance Units is re-measured at each closing date as far as they are not paid.
For equity-settled plans, compensation expense is measured at the grant date at the fair value by multiplying the number of shares expected to vest by the fair value of one LTIP share taking into account the extent to which the employees have rendered service to date. The compensation expense is accounting for over the vesting period of each LTIP equity-settled plans.
The fair value of each LTIP share (equity or cash-settled plans) is determined using a forward pricing model and is based on\u00a0publicly available risk free rate, volatility and dividend rate.
Besides the equity-settled plans described above, the Employee Share Ownership Plan(\u201cESOP\u201d) is an additional equity-settled share-based payment plan. Under this plan, the Company offers its employees Airbus\u00a0SE shares at fair value matched with a number of free shares based on a determining ratio. The fair value of shares provided is reflected as personnel expenses in the Company\u2019s Consolidated Income Statement with a corresponding increase in equity.
The Company hedges the share price risk inherent in the cash-settled LTIP units by entering into equity swaps where the reference price is based on the Airbus\u00a0SE share price. To the extent that cash-settled LTIP units are hedged, compensation expense recognised for these units will effectively reflect the reference price fixed under the equity swaps. In order to avoid any dilution of its current shareholders out of equity-settled LTIP units, the Company used to perform share buybacks to meet its obligations to its employees, following the decisions of the Board of Directors and approval of the Annual General Meeting (\u201cAGM\u201d).
In 2022, compensation expenses for LTIPs (incl. Equity Pool) including the effect of the equity swaps amounted to \u20ac\u200949\u00a0million (2021: \u20ac\u200936\u00a0million), among which \u20ac\u200921\u00a0million for cash-settled plans (2021: \u20ac\u200923\u00a0million) and \u20ac\u200928\u00a0million for equity-settled plans (2021: \u20ac\u200913\u00a0million).
As of 31\u00a0December 2022, provisions of \u20ac\u200957\u00a0million (2021: \u20ac\u200955\u00a0million) relating to LTIP units (cash-settled) have been accounted for.
The lifetime of the Performance Units as well as Performance Shares is contractually fixed (see the description of the respective tranche in the following table). For the units, the measurement is next to other market data, mainly affected by the share price as of the end of the reporting period (\u20ac\u2009111.02 as of 31\u00a0December 2022) and the lifetime of the units.
The fair value of units and shares granted in the frame of the LTIP 2022 plan is as follows:
Expected vesting date (In \u20ac per unit / share granted) | Fair value of Performance Shares |
|---|---|
May\u00a02026 - Performance Shares | 110.85 |
The principal characteristics of the LTIPs as at 31\u00a0December 2022 are summarised below:
LTIP 2017 (7) | LTIP 2018 (8) | LTIP 2019 (9) | LTIP 2020 | LTIP 2021 | LTIP 2022 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
Grant date (1) | 30 October 2017 | 30 October 2018 | 29 October 2019 | 28 October 2020 | 15 December 2021 | 14 December 2022 | ||||
Performance Units and Performance Shares Plan | ||||||||||
Units | Units | Shares | Units | Shares | Units | Shares | Units | Shares | Shares | Shares |
Number of units/shares\u00a0 | 421,638 | 425,702 | 278,376 | 281,181 | 247,508 | 247,508 | 420,004 | 420,004 | 520,870 | 649,373 |
Fair value at grant date (3) | 74.83 / 71.69 | 76.76 | 84.09 / 83.28 | 85.01 | 112.83 / 108.44 | 112.92 | 51.04 / 46.98 | 55.49 | 89.83 | 110.85 |
Fair Value of performance units as of 31 December\u00a0 | 0 | - | 108.79 | - | 108.77 / 105.94 | - | 108.77 / 105.94 | - | - | - |
Number of units/shares granted through Equity Pool (4) | 1,898 | 1,898 | 6,964 | 6,964 | 4,343 | 4,252 | 1,224 | 1,224 | 7,438 | 1,348 |
Number of units/ | 0 | 0 | 64,147 | 0 | 114,075 | 115,134 | 401,527 | 401,527 | 522,932 | 650,721 |
Total number of eligible beneficiaries | 1,601 | 1,626 | 1,576 | 1,602 | 1,782 | 1,574 | ||||
Vesting conditions | The Performance Units and Performance Shares will vest if the participant is still employed by a company of the Group at the respective vesting dates and upon achievement of mid-term business performance. Vesting schedule is made up of two payments over two years for units, one date of delivery for shares. | |||||||||
Limited Share price per unit at vesting dates to (6) | \u20ac\u2009147.62 | - | \u20ac\u2009213.88 | - | \u20ac\u2009244.12 | - | \u20ac\u2009136.08 | - | - | - |
Vesting dates | 50% each expected: in June 2021 in June 2022 | 100% expected in May 2021 | 50% each expected: in June 2022 in June 2023 | 100% expected in May 2022 | 50% each expected: in June 2023 in June 2024 | 100% expected in May 2023 | 50% each expected: in June 2024 in June 2025 | 100% expected in May 2024 | 100% expected in May 2025 | 100% expected in May 2026 |
Number of vested units/shares | 192,010 | 194,975 | 66,714 | 132,120 | 0 | 0 | 0 | 0 | 0 | 0 |
(1) Date, when the vesting conditions were determined. (2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of 150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of the Company) during the performance period, the Board of Directors can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition). (3) Values are provided for units corresponding per vesting date. (4) Mirroring the respective plan rules and regulations, but granted at a different date based on specific Board of Directors\u2019 resolutions. (5) Including shares granted through the Equity Pool, if applicable. (6) Corresponds to 200% of the respective reference share price. Overall, the pay-out for Performance Units is limited to a total amount of 250% of the units originally granted, each valued with the respective reference share price of \u20ac\u200973.81 (for LTIP 2017), \u20ac\u2009106.94 (for LTIP 2018), \u20ac\u2009122.06 (for LTIP 2019), \u20ac\u200968.04 (for LTIP 2020). (7) Based on performance achievement of 50% for Performance Units under LTIP 2017. (8) Based on performance achievement of 50% for Performance Units under LTIP 2018. (9) Based on performance achievement of 50% for Performance Units under LTIP 2019. |
Additionally, the Board of Directors approved in 2022 the exceptional grant of 1,836 Restricted Units and 47,035 Restricted Shares (2021: 1,354 Units and 10,725 Shares) under the Equity Pool with an average fair value of \u20ac\u2009102.64. 4,826 Units and 2,165 Shares have vested in 2022 (2021: 2,017 Units and 3,578 Shares). The number of units granted under the Equity Pool and outstanding as of 31\u00a0December 2022 is 1,836 Units and 56,857 Shares (2021: 6,086 Units and 13,247 Shares).
In 2022 and 2021, the Board of Directors approved a new ESOP scheme. Eligible employees were able to purchase a fixed number of previously unissued shares at fair market value (5, 10, 15, 30, 60 or 100\u00a0shares in 2022, 5, 15, 30, 50 or 100\u00a0shares in 2021). The Company matched each fixed number of shares with a number of the Company free shares based on a determined ratio (5, 9, 12, 20, 35 and 55 free shares, respectively in 2022, versus 4, 7, 10, 13 and 25 free shares, respectively in 2021). During a custody period of at least one year, employees are restricted from selling the shares, but have the right to receive all dividends paid. Employees who directly purchased the Airbus\u00a0SE shares have, in addition, the ability to vote at the Annual Shareholder Meetings. The subscription price was equal to the closing price at the Paris stock exchange on 16\u00a0March 2022 (2021: 17\u00a0February 2021) and amounted to \u20ac\u2009106.82 (2021: \u20ac\u200993.90). Investing through a mutual fund led to a price which corresponds to the average price at the Paris stock exchange during the 20 trading days immediately preceding 16\u00a0February 2022 (2021: 17\u00a0February 2021), resulting in a price of \u20ac\u2009114.01 (2021: \u20ac\u200989.52).
In 2022, the Company issued and sold 1,296,252 ordinary shares (2021: 1,442,645) with a nominal value of \u20ac\u20091.00 each.
In 2022, the Company issued and distributed 824,793 matching ordinary shares (2021: 491,775) with a nominal value of \u20ac\u20091.00 each. Compensation expense (excluding social security contributions) of \u20ac\u200982\u00a0million (2021: \u20ac\u200949\u00a0million) was recognised in connection with ESOP in 2022.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-60": { "value": "Several German companies provide life-time working account models, being employee benefit plans with a promised return on contributions or notional contributions that qualify as other long-term employee benefits under IAS\u00a019. The employees\u2019 periodical contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in other personnel charges.When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-61": { "value": "(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Provisions for retirement plans | 3,302 | 6,240 |
Provisions for deferred compensation | 207 | 832 |
Retirement plans and similar obligations | 3,509 | 7,072 |
In addition, as a consequence of the increased discount rates a non-current asset of \u20ac\u2009642\u00a0million has been accounted for to reflect the surplus in two pension funds in the UK, the Airbus Section of the participation in BAE Systems Pension Scheme and the Company UK Pension Scheme (see \u201c\u2013 Note\u00a027: Other Assets and Other Liabilities\u201d).
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.
The Defined Benefit Obligation (\u201cDBO\u201d) exposes the Company to actuarial risks, including mainly the following ones:
Market price risk \u2014 The return on plan assets is assumed to be the discount rate derived from AA-rated corporate bonds. If the actual return rate of plan assets is lower than the applied discount rate, the net liability increases accordingly. Moreover, the market values of the plan assets are subject to volatility, which also impacts the net liability.
Interest rate risk \u2014 The level of the DBO is significantly impacted by the applied discount rate. The low interest rates in recent years, particular in the euro-denominated market environment, lead to a relatively high net pension liability. If there is again a decline in returns of corporate bonds, the DBO will increase in future periods, which might only be offset partially by the positive development of market values of those corporate bonds included in plan assets. Generally, the pension obligation is sensitive to movements in the interest rate leading to volatile results in the valuation.
Inflation risk \u2014 The pension liabilities can be sensitive to movements in the inflation rate, whereby a higher inflation rate could lead to an increasing liability. Since some pension plans are directly related to salaries, increases in compensations could result in increasing pension obligations. For the deferred compensation plan P3, which is financed by the employees a fixed interest rate has been agreed.
Longevity risk \u2014 The pension liabilities are sensitive to the life expectancy of its members. Rising life expectancies lead to an increase in the valuation of the DBO.
The weighted average assumptions used in calculating the actuarial values of the most significant retirement plans as of 31\u00a0December 2022 are as follows:
(Rate in %) | Pension plans in | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Germany | France | UK | Participation in | Canada | ||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Discount rate | 3.6 | 1.1 | 3.7 | 1.0 | 4.8 | 2.0 | 5.0 | 1.9 | 5.3 | 3.3 |
Rate of compensation increase | 3.4 | 2.8 | 3.0 | 2.5 | 3.3 | 3.3 | 3.4 | 3.1 | 3.0 | 2.9 |
Rate of pension increase | 2.4 | 1.7 | 2.1 | 1.6 | 3.0 | 3.0 | 3.1 | 3.1 | 2.0 | 2.0 |
Inflation rate | 2.4 | 1.7 | 2.1 | 1.6 | 3.2 | 3.2 | 3.3 | 3.2 | 2.0 | 2.0 |
Discount rate \u2014 For Germany and France, the Company derives the discount rate used to determine the DBO from yields on high quality corporate bonds with an AA rating. The determination of the discount rate is based on the iBoxx \u20ac Corporates AA bond data and uses the granularity of single bond data in order to receive more market information from the given bond index. The discount rate for the estimated duration of the respective pension plan is then extrapolated along the yield curve. In the UK, it is determined with reference to the full yield curve of AA-rated sterling-denominated corporate bonds of varying maturities. The salary increase rates are based on long-term expectations of the respective employers, derived from the assumed inflation rate and adjusted by promotional or productivity scales.
Rate of pension increase \u2014 Rates for pension payment increases are derived from the respective inflation rate for the plan.
Inflation rates \u2014 Inflation rate for German and French plans corresponds to the expected long term increase in cost of living. In the UK, the inflation assumptions are derived by reference to the difference between the yields on index-linked and fixed-interest long-term government bonds.
Mortality tables \u2014 For the calculation of the German pension obligation, the \u201c2018 G\u201d mortality tables (generation tables) as developed by Professor Dr. Klaus Heubeck are applied, while the disability rates of the Heubeck Tables have been reduced to 30%, to align with actual observation.
For the UK schemes, the Self-Administered Pensions S2 mortality tables based on year of birth (as published by the Institute of Actuaries) is used in conjunction with the results of an investigation into the actual mortality experience of scheme members. In France, Institute for French Statistics (\u201cINSEE\u201d) tables are applied.
The development of the provision for retirement and deferred compensation plans is set out below:
(In \u20ac million) | DBO | Plan assets | Total provisions | ||||
|---|---|---|---|---|---|---|---|
Pension plans of | Participation in | Total | Pension plans of | Participation in | Total | ||
Balance at 1 January 2021 | 18,778 | 4,370 | 23,148 | (9,896) | (3,272) | (13,168) | 9,980 |
Service cost (including past service cost) | 225 | 66 | 291 | 0 | 0 | 0 | 291 |
Interest cost and income | 118 | 61 | 179 | (69) | (45) | (114) | 65 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 48 | (6) | 42 | 0 | 0 | 0 | 42 |
changes in financial assumptions | (1,378) | (75) | (1,453) | 0 | 0 | 0 | (1,453) |
changes in experience adjustments | 95 | 44 | 139 | 0 | 0 | 0 | 139 |
plan assets | 0 | 0 | 0 | (954) | (387) | (1,341) | (1,341) |
Changes in consolidation, transfers and others | (12) | 0 | (12) | (14) | 0 | (14) | (26) |
Benefits paid | (455) | (167) | (622) | 156 | 167 | 323 | (299) |
Contributions by employer and other plan participants | 117 | 1 | 118 | (442) | (97) | (539) | (421) |
Foreign currency translation adjustments | 163 | 304 | 467 | (134) | (238) | (372) | 95 |
Balance at 31 December 2021 | 17,699 | 4,598 | 22,297 | (11,353) | (3,872) | (15,225) | 7,072 |
Service cost (including past service cost) | (25) | 72 | 47 | 0 | 0 | 0 | 47 |
Interest cost and income | 217 | 85 | 302 | (141) | (72) | (213) | 89 |
Remeasurements: actuarial (gains) and losses arising from | |||||||
changes in demographic assumptions | 141 | (3) | 138 | 0 | 0 | 0 | 138 |
changes in financial assumptions | (5,246) | (2,056) | (7,302) | 0 | 0 | 0 | (7,302) |
changes in experience adjustments | 613 | 370 | 983 | 0 | 0 | 0 | 983 |
plan assets | 0 | 0 | 0 | 1,911 | 740 | 2,651 | 2,651 |
Changes in consolidation, transfers and others | (34) | 0 | (34) | 9 | 0 | 9 | (25) |
Benefits paid | (442) | (121) | (563) | 159 | 121 | 280 | (283) |
Contributions by employer and other plan participants | 80 | 1 | 81 | (348) | (254) | (602) | (521) |
Foreign currency translation adjustments | (67) | (178) | (245) | 80 | 183 | 263 | 18 |
Balance at 31 December 2022 | 12,936 | 2,768 | 15,704 | (9,683) | (3,154) | (12,837) | 2,867 |
The figures shown in the table include the surplus in two pension funds in the UK, resulting from a defined benefit obligation and assets of \u20ac\u20093,867\u00a0million and \u20ac\u20094,509\u00a0million that have been accounted as a non-current asset.
In the figures shown in the table, amounts of \u20ac\u20091,715\u00a0million and \u20ac\u20091,508\u00a0million are included for the defined benefit obligation and plan assets for deferred compensation plans in Germany (2021: \u20ac\u20092,503\u00a0million and \u20ac\u20091,682\u00a0million).
The past service cost included in the service cost amounts to \u20ac\u2009-400\u00a0million and \u20ac -228\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The employer contributions amount to \u20ac\u2009595\u00a0million and \u20ac\u20096\u00a0million for other plan participants as of 31\u00a0December 2022 (2021: \u20ac\u2009533\u00a0million and \u20ac\u20096\u00a0million respectively).
Additionally, the Company considers liabilities for lump sum payments (one-off payment or lump sum instalments) under the German P3 and APP pension arrangements in the total amount of \u20ac\u2009183\u00a0million and \u20ac\u2009172\u00a0million as of 31\u00a0December 2022 and 2021, respectively.
The funding of the plans is as follows:
(In \u20ac million) | 31 December | |||
|---|---|---|---|---|
2022 | 2021 | |||
DBO | Plan assets | DBO | Plan assets | |
Unfunded pension plans | 873 | 0 | 1,406 | 0 |
Funded pension plans (partial) | 14,831 | (12,837) | 20,891 | (15,225) |
Total | 15,704 | (12,837) | 22,297 | (15,225) |
As of 31\u00a0December 2022, provisions for pensions decreased by \u20ac -3.6\u00a0billion. It mainly reflects the increase of the discount rates in Germany, France, Canada and the UK of\u00a0\u20ac\u20097.8\u00a0billion, resulting from market volatility related mainly to the Ukraine crisis. It is partly offset by deteriorated performance of the asset market values for \u20ac\u20092.7\u00a0billion and increased inflation assumptions particularly in Germany and France for \u20ac\u20090.5\u00a0billion.
Furthermore, due to the re-measurement of past service cost in the retirement obligation, a gain of \u20ac\u20090.4\u00a0billion was recognised in the first quarter 2022.
In 2022, contributions for retirement and deferred compensation plans amount to \u20ac\u2009601\u00a0million. This mainly consists of:
Contributions of approximately \u20ac\u2009700\u00a0million are expected to be made in 2023.
The weighted average duration of the DBO for retirement plans and deferred compensation is 15\u00a0years at 31\u00a0December 2022 (31\u00a0December 2021: 18\u00a0years).
The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for the most significant plans is as follows:
Active | Deferred | Pensioner | |
|---|---|---|---|
Germany | 43% | 10% | 47% |
France | 99% | 0% | 1% |
UK | 63% | 16% | 21% |
Participation in BAE System Pension Scheme (Main Scheme) | 35% | 15% | 50% |
Canada | 82% | 2% | 16% |
The split of the present value of DBO for retirement plans and deferred compensation for the most significant plans is as follows:
Present value of DBO | Plan assets | |||
|---|---|---|---|---|
Retirement plans | Deferred Compensation plans | Retirement plans | Deferred Compensation plans | |
Germany | 83% | 17% | 81% | 19% |
France | 100% | 0% | 100% | 0% |
UK | 100% | 0% | 100% | 0% |
Participation in BAE System Pension Scheme (Main Scheme) | 100% | 0% | 100% | 0% |
Canada | 100% | 0% | 100% | 0% |
The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.
The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
(In \u20ac million) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Quoted prices | Unquoted prices | Total | Quoted prices | Unquoted prices | Total | |
Equity securities | ||||||
Europe | 565 | 0 | 565 | 1,539 | 0 | 1,539 |
Rest of the world | 128 | 0 | 128 | 408 | 0 | 408 |
Emerging markets | 417 | 0 | 417 | 561 | 0 | 561 |
Global | 1,959 | 898 | 2,857 | 2,896 | 693 | 3,589 |
Bonds | ||||||
Corporates | 2,502 | 1,114 | 3,616 | 3,125 | 283 | 3,408 |
Governments | 2,370 | 0 | 2,370 | 2,393 | 0 | 2,393 |
Pooled investments vehicles | 725 | 0 | 725 | 328 | 0 | 328 |
Commodities | 0 | 0 | 0 | 0 | 0 | 0 |
Hedge funds | 0 | 0 | 0 | 0 | 459 | 459 |
Derivatives | 0 | (278) | (278) | 0 | (71) | (71) |
Property | 0 | 767 | 767 | 0 | 723 | 723 |
Cash and money market funds | 202 | 144 | 346 | 344 | 263 | 607 |
Others | 0 | 1,324 | 1,324 | 0 | 1,281 | 1,281 |
Balance at 31 December | 8,868 | 3,969 | 12,837 | 11,594 | 3,631 | 15,225 |
The majority of funded plans apply broadly an asset-liability matching framework. The strategic asset allocation of the plans takes into account the characteristics of the underlying obligations. Investments are widely diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2022 consists of fixed income and equity instruments, although the Company also invests in property, commodities and hedge funds. The Company reassesses the characteristics of the pension obligations from time to time or as required by the applicable regulation or governance framework. This typically triggers a subsequent review of the strategic asset allocation.
The amount recorded as provision for retirement and deferred compensation plans can be allocated to the countries as follows:
(In \u20ac million) | Pension plans of the Company | Participation in BAE Systems Pension Scheme in the UK | Total | |||
|---|---|---|---|---|---|---|
Germany | France | UK | Canada | |||
DBO | 10,157 | 1,243 | 1,100 | 436 | 2,768 | 15,704 |
Plan assets | 7,957 | 19 | 1,356 | 351 | 3,154 | 12,837 |
Recognised at 31 December 2022 | 2,200 | 1,224 | (256) | 85 | (386) | 2,867 |
DBO | 13,330 | 1,941 | 1,858 | 570 | 4,598 | 22,297 |
Plan assets | 9,063 | 21 | 1,858 | 411 | 3,872 | 15,225 |
Recognised at 31 December 2021 | 4,267 | 1,920 | 0 | 159 | 726 | 7,072 |
When Company employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations and practices of the countries in which it operates.
Provision for deferred compensation represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalent commitment for deferred compensation which is treated as a defined benefit post-employment plan.
France \u2014 The French pension system is operated on a \u201cpay as you go\u201d basis. Besides the basic pension from the French social security system, each employee is entitled to receive a complementary pension from defined contribution schemes AGIRC-ARRCO (Association pour le r\u00e9gime de retraite compl\u00e9mentaire des salari\u00e9s and Association g\u00e9n\u00e9rale des institutions de retraite des cadres). Moreover, French law stipulates that employees are paid retirement indemnities in the form of lump sums on the basis of the length of service, which are considered as defined benefit obligations.
Germany \u2014 The Company has a pension plan (P3) for executive and non-executive employees in place. Under this plan, the employer provides contributions for the services rendered by the employees, which are dependent on their salaries in the respective service period. These contributions are converted into components which become part of the accrued pension liability at the end of the year. Total benefits are calculated as a career average over the entire period of service. Certain employees that are not covered by this plan receive retirement indemnities based on salary earned in the last year or on an average of the last three years of employment. For some executive employees, benefits are dependent on the final salary of the respective individual at the date of retirement and the time period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (\u201cAPP\u201d) with security-linked benefits in Germany, which all new entrants after 1\u00a0January 2018 will join. Accordingly, the existing pension plan has been closed for new entrants. As of 1\u00a0January 2019, deferred compensation, which is financed by the employees, is offered exclusively in APP for all employees. In 2020 the Company transferred about half of the active population of the P3 plan into APP. With effect as of 1\u00a0January 2020 these employees will accrue future benefits under APP but not in P3 anymore. Benefits related to past service are not affected by this transfer.
Parts of the pension obligation in Germany are funded by assets invested in specific funding vehicles. Besides a relief fund (\u201cUnterst\u00fctzungskasse\u201d), the Company has implemented a Contractual Trust Arrangement. The Contractual Trust Arrangement structure is that of a bilateral trust arrangement. Assets that are transferred to the relief fund and the Contractual Trust Arrangement qualify as plan assets under IAS\u00a019.
In the trust arrangements between the trust and the participating companies a minimum funding requirement is stipulated for the portion of the obligation for deferred compensation, which is not protected by the pension guarantee association or Pensions-Sicherungs Verein in case of an insolvency of the subsidiaries concerned. Some portions of the obligation must be covered with securities in the same amount, while other portions must be covered by 115%.
United Kingdom \u2014 The Company UK Pension Scheme (\u201cthe Scheme\u201d) was implemented by Airbus Defence and Space\u00a0Ltd., Stevenage (UK) as the principal employer. This plan comprises all eligible employees of Airbus Defence and Space\u00a0Ltd. as well as all personnel, who were recruited by one of the Company subsidiaries located in the UK and participating in the scheme. The major part of the obligation is funded by scheme assets due to contributions of the participating companies. The Scheme is a registered pension scheme under the Finance Act\u00a02004. The trustee\u2019s only formal funding objective is the statutory funding objective under the Pensions Act part\u00a03 2004, which is to have sufficient and appropriate assets to cover the Scheme\u2019s obligations. Since 1\u00a0November 2013, this plan is generally closed for joiners, who participate in a separate defined contribution plan.
Moreover, the Company participates in the UK in several funded trustee-administered pension plans for both executive and non-executive employees with BAE Systems being the principal employer. The Company\u2019s most significant investments in terms of employees participating in these BAE Systems UK pension plans is Airbus Operations\u00a0Ltd. Participating Airbus Operations\u00a0Ltd. employees have continued to remain members in the BAE Systems UK pension plans due to the UK pension agreement between the Company and BAE Systems and a change in the UK pensions legislation enacted in April\u00a02006.
For the most significant of these BAE Systems Pension Schemes, the Main Scheme, BAE Systems, the Company and the scheme Trustees agreed on a sectionalisation, which was implemented on 1\u00a0April 2016. Although BAE Systems remains the only principal employer of the Scheme, the Company has obtained powers in relation to its section which are the same as if it were the principal employer.
Based on the funding situation of the respective pension schemes, the pension plan trustees determine the contribution rates to be paid by the participating employers to adequately fund the schemes. The different UK pension plans in which the Company investments participate are currently underfunded. Airbus Operations\u00a0Ltd. (for its section of the Main Scheme) and BAE Systems (for the other schemes) have agreed with the trustees various measures designed to make good the underfunding. These include (i)\u00a0regular contribution payments for active employees well above such which would prevail for funded plans and (ii)\u00a0extra employers\u2019 contributions.
In the event that an employer who participates in the BAE Systems pension schemes fails or cannot be compelled to fulfil its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.
The Company considers the likelihood of this event as remote. However, for the Main Scheme the Company considers that its obligation is in principle limited to that related to its section.
In addition, the Company has two guarantees to cover its obligation towards the Scheme and the BAE Systems pension schemes. To mitigate its exposure, the first\u00a0guarantee covers an amount up to GBP 1.25\u00a0billion\u00a0for an unlimited period of time\u00a0while the second one covers an\u00a0uncapped\u00a0amount terminating in 2046, respectively for the Scheme and the BAE Systems Pension Schemes.
Canada \u2014 Airbus Canada Limited Partnership sponsors defined benefit plans for its salaried, hourly and executive employees. In 2020, Airbus acquired Stelia Aeronautics Saint-Laurent\u00a0Inc. which sponsors a defined benefit plan for its salaried and hourly employees.The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been influenced by changes in the actuarial assumptions as set out for 31\u00a0December 2022:
Change in actuarial assumptions | Impact on DBO | ||
|---|---|---|---|
Change at 31 December | |||
2022 | 2021 | ||
Present value of the DBO | 15,704 | 22,297 | |
Discount rate | Increase by 0.5%-point | (1,051) | (1,899) |
Decrease by 0.5%-point | 1,178 | 2,187 | |
Rate of compensation increase | Increase by 0.25%-point | 84 | 168 |
Decrease by 0.25%-point | (80) | (160) | |
Rate of pension increase | Increase by 0.25%-point | 259 | 438 |
Decrease by 0.25%-point | (250) | (420) | |
Life expectancy | Increase by one year | 366 | 654 |
Sensitivities are calculated based on the same method (present value of the DBO calculated with the projected unit credit method) as applied when calculating the post-employment benefit obligations. The sensitivity analyses are based on a change of one assumption while holding all other assumptions constant. This is unlikely to occur in practice and changes of more than one assumption may be correlated leading to different impacts on the DBO than disclosed above. If the assumptions change at a different level, the effect on the DBO is not necessarily in a linear relation.", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityAnalysisForActuarialAssumptionsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-62": { "value": "
Share-based compensation \u2014 Since 2016, the Company operates a Performance Units and Performance Shares Plan. Performance Units qualify as a cash-settled share based payment plan under IFRS\u00a02 and Performance Shares qualify as anequity-settled share-based payment plan under IFRS\u00a02.
Since 2021, the Company operates only a Performance Shares Plan.
Plans granting Restricted Units, Performance Units and/or Performance Shares are also mentioned as \u201cLTIP\u201d in the following notes.
Since 2018, the Company operates also exceptional grants of Performance and Restricted Units as well as Performance and Restricted Shares under an Equity Pool. Such exceptional grants are validated by specific resolutions from the Board of Directors and qualify as cash-settled or equity-settled share-based payment plans under IFRS\u00a02. Accounting principles and methodology are the ones applied for LTIP as described below.
For cash-settled plans, provisions for associated services received are measured at fair value by multiplying the number of units expected to vest with the fair value of one LTIP unit at the end of each reporting period, taking into account the extent to which the employees have rendered service to date. Changes of the fair value are recognised as personnel expenses of the period, leading to a re-measurement of the provision. The fair value of Performance Units is re-measured at each closing date as far as they are not paid.
For equity-settled plans, compensation expense is measured at the grant date at the fair value by multiplying the number of shares expected to vest by the fair value of one LTIP share taking into account the extent to which the employees have rendered service to date. The compensation expense is accounting for over the vesting period of each LTIP equity-settled plans.
The fair value of each LTIP share (equity or cash-settled plans) is determined using a forward pricing model and is based on\u00a0publicly available risk free rate, volatility and dividend rate.
Besides the equity-settled plans described above, the Employee Share Ownership Plan(\u201cESOP\u201d) is an additional equity-settled share-based payment plan. Under this plan, the Company offers its employees Airbus\u00a0SE shares at fair value matched with a number of free shares based on a determining ratio. The fair value of shares provided is reflected as personnel expenses in the Company\u2019s Consolidated Income Statement with a corresponding increase in equity.
The Company hedges the share price risk inherent in the cash-settled LTIP units by entering into equity swaps where the reference price is based on the Airbus\u00a0SE share price. To the extent that cash-settled LTIP units are hedged, compensation expense recognised for these units will effectively reflect the reference price fixed under the equity swaps. In order to avoid any dilution of its current shareholders out of equity-settled LTIP units, the Company used to perform share buybacks to meet its obligations to its employees, following the decisions of the Board of Directors and approval of the Annual General Meeting (\u201cAGM\u201d).
In 2022, compensation expenses for LTIPs (incl. Equity Pool) including the effect of the equity swaps amounted to \u20ac\u200949\u00a0million (2021: \u20ac\u200936\u00a0million), among which \u20ac\u200921\u00a0million for cash-settled plans (2021: \u20ac\u200923\u00a0million) and \u20ac\u200928\u00a0million for equity-settled plans (2021: \u20ac\u200913\u00a0million).
As of 31\u00a0December 2022, provisions of \u20ac\u200957\u00a0million (2021: \u20ac\u200955\u00a0million) relating to LTIP units (cash-settled) have been accounted for.
The lifetime of the Performance Units as well as Performance Shares is contractually fixed (see the description of the respective tranche in the following table). For the units, the measurement is next to other market data, mainly affected by the share price as of the end of the reporting period (\u20ac\u2009111.02 as of 31\u00a0December 2022) and the lifetime of the units.
The fair value of units and shares granted in the frame of the LTIP 2022 plan is as follows:
Expected vesting date (In \u20ac per unit / share granted) | Fair value of Performance Shares |
|---|---|
May\u00a02026 - Performance Shares | 110.85 |
The principal characteristics of the LTIPs as at 31\u00a0December 2022 are summarised below:
LTIP 2017 (7) | LTIP 2018 (8) | LTIP 2019 (9) | LTIP 2020 | LTIP 2021 | LTIP 2022 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
Grant date (1) | 30 October 2017 | 30 October 2018 | 29 October 2019 | 28 October 2020 | 15 December 2021 | 14 December 2022 | ||||
Performance Units and Performance Shares Plan | ||||||||||
Units | Units | Shares | Units | Shares | Units | Shares | Units | Shares | Shares | Shares |
Number of units/shares\u00a0 | 421,638 | 425,702 | 278,376 | 281,181 | 247,508 | 247,508 | 420,004 | 420,004 | 520,870 | 649,373 |
Fair value at grant date (3) | 74.83 / 71.69 | 76.76 | 84.09 / 83.28 | 85.01 | 112.83 / 108.44 | 112.92 | 51.04 / 46.98 | 55.49 | 89.83 | 110.85 |
Fair Value of performance units as of 31 December\u00a0 | 0 | - | 108.79 | - | 108.77 / 105.94 | - | 108.77 / 105.94 | - | - | - |
Number of units/shares granted through Equity Pool (4) | 1,898 | 1,898 | 6,964 | 6,964 | 4,343 | 4,252 | 1,224 | 1,224 | 7,438 | 1,348 |
Number of units/ | 0 | 0 | 64,147 | 0 | 114,075 | 115,134 | 401,527 | 401,527 | 522,932 | 650,721 |
Total number of eligible beneficiaries | 1,601 | 1,626 | 1,576 | 1,602 | 1,782 | 1,574 | ||||
Vesting conditions | The Performance Units and Performance Shares will vest if the participant is still employed by a company of the Group at the respective vesting dates and upon achievement of mid-term business performance. Vesting schedule is made up of two payments over two years for units, one date of delivery for shares. | |||||||||
Limited Share price per unit at vesting dates to (6) | \u20ac\u2009147.62 | - | \u20ac\u2009213.88 | - | \u20ac\u2009244.12 | - | \u20ac\u2009136.08 | - | - | - |
Vesting dates | 50% each expected: in June 2021 in June 2022 | 100% expected in May 2021 | 50% each expected: in June 2022 in June 2023 | 100% expected in May 2022 | 50% each expected: in June 2023 in June 2024 | 100% expected in May 2023 | 50% each expected: in June 2024 in June 2025 | 100% expected in May 2024 | 100% expected in May 2025 | 100% expected in May 2026 |
Number of vested units/shares | 192,010 | 194,975 | 66,714 | 132,120 | 0 | 0 | 0 | 0 | 0 | 0 |
(1) Date, when the vesting conditions were determined. (2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of 150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of the Company) during the performance period, the Board of Directors can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition). (3) Values are provided for units corresponding per vesting date. (4) Mirroring the respective plan rules and regulations, but granted at a different date based on specific Board of Directors\u2019 resolutions. (5) Including shares granted through the Equity Pool, if applicable. (6) Corresponds to 200% of the respective reference share price. Overall, the pay-out for Performance Units is limited to a total amount of 250% of the units originally granted, each valued with the respective reference share price of \u20ac\u200973.81 (for LTIP 2017), \u20ac\u2009106.94 (for LTIP 2018), \u20ac\u2009122.06 (for LTIP 2019), \u20ac\u200968.04 (for LTIP 2020). (7) Based on performance achievement of 50% for Performance Units under LTIP 2017. (8) Based on performance achievement of 50% for Performance Units under LTIP 2018. (9) Based on performance achievement of 50% for Performance Units under LTIP 2019. |
Additionally, the Board of Directors approved in 2022 the exceptional grant of 1,836 Restricted Units and 47,035 Restricted Shares (2021: 1,354 Units and 10,725 Shares) under the Equity Pool with an average fair value of \u20ac\u2009102.64. 4,826 Units and 2,165 Shares have vested in 2022 (2021: 2,017 Units and 3,578 Shares). The number of units granted under the Equity Pool and outstanding as of 31\u00a0December 2022 is 1,836 Units and 56,857 Shares (2021: 6,086 Units and 13,247 Shares).
In 2022 and 2021, the Board of Directors approved a new ESOP scheme. Eligible employees were able to purchase a fixed number of previously unissued shares at fair market value (5, 10, 15, 30, 60 or 100\u00a0shares in 2022, 5, 15, 30, 50 or 100\u00a0shares in 2021). The Company matched each fixed number of shares with a number of the Company free shares based on a determined ratio (5, 9, 12, 20, 35 and 55 free shares, respectively in 2022, versus 4, 7, 10, 13 and 25 free shares, respectively in 2021). During a custody period of at least one year, employees are restricted from selling the shares, but have the right to receive all dividends paid. Employees who directly purchased the Airbus\u00a0SE shares have, in addition, the ability to vote at the Annual Shareholder Meetings. The subscription price was equal to the closing price at the Paris stock exchange on 16\u00a0March 2022 (2021: 17\u00a0February 2021) and amounted to \u20ac\u2009106.82 (2021: \u20ac\u200993.90). Investing through a mutual fund led to a price which corresponds to the average price at the Paris stock exchange during the 20 trading days immediately preceding 16\u00a0February 2022 (2021: 17\u00a0February 2021), resulting in a price of \u20ac\u2009114.01 (2021: \u20ac\u200989.52).
In 2022, the Company issued and sold 1,296,252 ordinary shares (2021: 1,442,645) with a nominal value of \u20ac\u20091.00 each.
In 2022, the Company issued and distributed 824,793 matching ordinary shares (2021: 491,775) with a nominal value of \u20ac\u20091.00 each. Compensation expense (excluding social security contributions) of \u20ac\u200982\u00a0million (2021: \u20ac\u200949\u00a0million) was recognised in connection with ESOP in 2022.", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-63": { "value": "The Company\u2019s key management personnel consists of Members of the Executive Committee and Non-Executive Board Members. The Chief Executive Officer (\u201cCEO\u201d), who chairs the Executive Committee, is the sole Executive Board Member. The annual remuneration and related compensation costs of the key management personnel as expensed in the respective year can be summarised as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Executive Committee, including Executive Board Member | ||
Salaries and other short-term benefits (including bonuses) | 19.4 | 19.5 |
Post-employment benefit costs | 4.0 | 5.2 |
Share-based remuneration (\u201cLTIP award\u201d, including associated hedge result) | 4.1 | 3.4 |
Termination benefits\u00a0(1) | 0 | 6.1 |
Other benefits | 0.3 | 0.4 |
Social charges\u00a0(2) | 6.0 | 4.6 |
Non-Executive Board Members | ||
Short-term benefits (including social charges) | 2.3 | 2.0 |
Total expense recognised | 36.1 | 41.2 |
(1) 2021 Termination benefits include the termination benefits related to the year 2021. (2) Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. |
The amount of bonuses is based on estimated performance achievement as at the balance sheet date and difference between previous year estimation and actual pay-out in the current year. Outstanding short-term benefits (bonuses) at year-end 2022 for Executive Committee Members based on estimated performance achievement at year-end was \u20ac\u200910.2\u00a0million (2021: \u20ac\u200911.4\u00a0million).
In order to support the Company\u2019s target of reducing its Scope\u00a01 and 2 carbon emissions by 63% by 2030, the Board of Directors decided to translate this ambition into a concrete objective and include the CO2 reduction target in the collective variable remuneration of the CEO and all executives.
The post-employment and other long-term benefits defined obligation for the Executive Committee, including the CEO, amounted to \u20ac\u200916.7\u00a0million at 31\u00a0December 2022 (2021: \u20ac\u200925.6\u00a0million). The disclosed post-employment and other long-term benefits reflect the total outstanding balance for all Executive Committee Members in charge at the end of the respective balance sheet date.
The share-based payment expenses result from not yet forfeited units and shares granted to the Executive Committee Members under the Company\u2019s LTIP which are re-measured at fair value according to the methodology described in Note\u00a033.
In 2022, the Members of the Executive Committee were granted 70,562 Performance Shares (2021: 66,575). For LTIP 2022, the respective fair value of these Shares at grant date was \u20ac\u20098.8\u00a0million (2021: \u20ac\u20096.5\u00a0million for both Performance Shares and Performance Units). As of 31\u00a0December 2022, provisions of \u20ac\u20095.4\u00a0million (2021: \u20ac\u20095.4\u00a0million) relating to LTIP have been recognised. The total number of outstanding Performance Units and Performance Shares granted to the current Members of the Executive Committee amounted to 81,183 and 206,211 respectively at 31\u00a0December 2022 (2021: 91,180 Performance Units and 152,967 Performance Shares).
The following benefits apply to Executive Committee Members, except the CEO.
In the case of contract termination, the Executive Committee Members are entitled to an indemnity equal to 1.5\u00a0times the Total Target Remuneration (defined as Base Salary and target Annual Variable Remuneration) with respect to applicable local legal requirements, if any.
This will not apply if the Executive Committee mandate is terminated for cause, in case of dismissal, if the Executive Committee Member resigns or has reached retirement age.
The Executive Committee Members\u2019 contract includes a non-compete clause which applies for a minimum of one year and can be extended at the Company\u2019s initiative for a further year. The Board of Directors has the discretion to waive or invoke the extension of the non-compete clause when legally or contractually possible. The compensation for each year that the non-compete clause applies is equal to 50% of the last Total Annual Remuneration (defined as Base Salary and Annual Variable Remuneration most recently paid) with respect to applicable local legal requirements, if any.
Past LTIP awards may be maintained in full or prorated, in such cases as in case of retirement or if a mandate is not renewed by the Company without cause, pro rata being based on the presence in the Company during performance periods. The vesting of past LTIP awards follows the plans\u2019 rules and regulations and is not accelerated in any case. LTIP awards are forfeited for Executives who leave the Company on their own initiative, but this is subject to review by the Board of Directors.
The termination benefits include assumptions about all effective, known or planned terminations to date.
Other benefits include expenses for Executive Committee Members\u2019 medical, death and disability coverage, company car and other usual facilities as applicable.
The annual remuneration and related compensation costs of the CEO as expensed in the respective year can be summarised as follows:
(In \u20ac) | 2022 | 2021 |
|---|---|---|
Base salary | 1,485,000 | 1,350,000 |
Annual variable pay | 2,008,800 | 22,247,750 |
Post-employment benefit costs | 1,385,222 | 1,138,794 |
Share-based remuneration (\u201cLTIP award\u201d)\u00a0(1) | 1,082,668 | 822,906 |
Termination benefits | 0 | 0 |
Other benefits | 32,734 | 32,479 |
Social charges\u00a0(2) | 1,357,922 | 1,089,385 |
(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment (see \u201c\u2013 Note\u00a033: Share-Based Payment\u201d). (2) Social charges depends on the applicable regulation to the CEO. In France, social charges comprise benefits accrued through mandatory collective and state plans such as pension, death and disability or medical coverage. |
The annual variable pay is based on estimated performance achievement as at the balance sheet date and difference between the previous year\u2019s estimation and actual pay-out in the current year.
Post-employment benefit costs relate to the aggregated amount of current service and interest costs for defined benefit plan and company cost for contributions base plans.
Following the Board decision approved in the AGM 2020, the CEO pension rights are accrued through a defined contributions plan from 1\u00a0January 2020, which coexists with the former defined benefit pension plan.
The accrued pension rights under the former defined benefit plan have been frozen at the end of 2019 and remain unvested until the retirement date of the CEO. The pension rights arising from the Company\u2019s defined contribution plan are deducted from the frozen defined pension rights.
As of 31\u00a0December 2022, the defined benefit obligation related to the frozen defined benefit commitment amounts to \u2009\u20ac\u20096,895,263 (2021: \u20ac\u20099,048,433). This obligation has been accrued in the 2022 Consolidated Financial Statements and will be updated annually up to the retirement date of the CEO considering additional service cost and future changes on economic assumptions or other factors like salary increase.
For the fiscal year 2022, the cost related to the CEO\u2019s pension rights accrued under Company\u2019s plans during the year represented an expense of \u20ac\u20091,385,222 (2021: \u20ac\u20091,138,794).
The annual cost of pension rights accrued under applicable mandatory collective and state pension plans are accounted for among social charges.
The table below gives an overview of the interests of the CEO, under the various LTIPs of the Company:
Granted Date | LTIP 2017 (1) | LTIP 2018 (1) | LTIP 2019 | LTIP 2020 | LTIP 2021 | LTIP 2022 |
|---|---|---|---|---|---|---|
Performance Units and Shares | 8,808 | 8,416 | 11,060 | 19,840 | 12,121 | 14,115 |
Revaluation | 50% | 50% | 50% | 100% | 100% | 100% |
Performance Units and Shares revalued | 4,404 | 4,208 | 5,531 | 19,840 | 12,121 | 14,115 |
Vested in 2022 | ||||||
in cash | 1,101 | 1,052 | 0 | 0 | 0 | 0 |
in shares | 0 | 2,104 | 0 | 0 | 0 | 0 |
Outstanding 2022 | ||||||
in cash | 0 | 1,052 | 2,766 | 9,920 | 0 | 0 |
in shares | 0 | 0 | 2,765 | 9,920 | 12,121 | 14,115 |
Vesting schedule | ||||||
Cash-settled units | For vesting dates, see \u201c\u2013 Note\u00a033.1: LTIP\u201d | |||||
Equity-settled units | May\u00a02021 | May\u00a02022 | May\u00a02023 | May\u00a02024 | May\u00a02025 | May\u00a02026 |
(1) 2017 and 2018 awards were granted before the appointment of the CEO and could vest during the CEO\u2019s mandate. |
Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
As of 31\u00a0December 2022, provisions of \u20ac\u20091,301,397 (2021: \u20ac\u20091,188,050) relating to Performance Units have been recognised. The pay-out from vested cash-settled LTIP in 2022 was \u20ac\u2009226,388 (2021: \u20ac\u2009324,504) excluding social charges.
The termination benefit applicable to the CEO is described in the Company\u2019s Remuneration policy.
As stipulated in the Company\u2019s Remuneration Policy, the benefits offered to the CEO are similar to the benefits granted to other executives of the Company and comprise, among other matters, medical, death and disability coverage (both through the French social security system and mandatory collective Company\u2019s plans), a company car and usual facilities. Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges. The monetary value of other benefits provided to the CEO in 2022 amounted to \u20ac\u200932,734 (2021: \u20ac\u200932,479).
The Company has not provided any loans to, advances to and guarantees on behalf of the CEO.
The remuneration of the Non-Executive Members of the Board of Directors was as follows:
(In \u20ac) | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
Fixum\u00a0(1) | Attendance Fees\u00a0(2) | Total | Fixum (1) | Attendance Fees (2) | Total | |
Non-Executive Board Members | ||||||
Ren\u00e9 Obermann | 225,000 | 135,000 | 360,000 | 210,000 | 90,000 | 300,000 |
Victor Chu | 100,000 | 66,000 | 166,000 | 100,000 | 43,000 | 143,000 |
Jean-Pierre Clamadieu | 140,000 | 96,500 | 236,500 | 130,000 | 67,500 | 197,500 |
Ralph D. Crosby, Jr. | 100,000 | 100,000 | 200,000 | 100,000 | 61,000 | 161,000 |
Mark Dunkerley\u00a0(3) | 124,420 | 112,000 | 236,420 | 100,000 | 66,000 | 166,000 |
Stephan Gemkow | 110,000 | 98,000 | 208,000 | 100,000 | 63,000 | 163,000 |
Catherine Guillouard | 140,000 | 98,000 | 238,000 | 130,000 | 67,500 | 197,500 |
Amparo Moraleda | 140,000 | 103,000 | 243,000 | 130,000 | 54,500 | 184,500 |
Claudia Nemat | 100,000 | 76,500 | 176,500 | 100,000 | 56,500 | 156,500 |
Irene Rummelhoff\u00a0(4) | 72,100 | 75,000 | 147,100 | - | - | - |
Tony Wood\u00a0(5) | 3,913 | 10,000 | 13,913 | - | - | - |
Former Non-Executive Board Members | ||||||
Lord Drayson\u00a0(6) | 33,811 | 15,000 | 48,811 | 120,000 | 49,500 | 169,500 |
Carlos Tavares\u00a0(7) | 22,541 | 5,000 | 27,541 | 80,000 | 45,000 | 125,000 |
Total | 1,311,785 | 990,000 | 2,301,785 | 1,300,000 | 663,500 | 1,963,500 |
(1) Fixum includes a base fee for Board membership and the relevant Committee membership as the case may be (Audit Committee, Remuneration, Nomination and Governance Committee (\u201cRNGC\u201d), Ethics, Compliance and Sustainability Committee (\u201cECSC\u201d) and/or ad hoc Committee). The fixum for the year 2022 was paid 50% in January\u00a02022 and 50% in July\u00a02022 except in relation to the ad hoc Committee for which the full amount was paid in January\u00a02023. The fixum for the year 2021 was paid 50% in January\u00a02021 and 50% in July\u00a02021. (2) 2022 attendance fees include the Board attendance fees and the fees in relation to the relevant Committee (Audit Committee, RNGC and ECSC) meetings. The Board attendance fees related to the first se mester 2022 were paid in July\u00a02022, those related to the second semester 2022 were paid in January\u00a02023. The Commit tees\u2019 attendance fees related to full year 2022 were paid in January\u00a02023. (3) Member of the RNGC since 12\u00a0April 2022 (4) Member of the Board of Directors and the ECSC since 12\u00a0April 2022. (5) Member of the Board of Directors since 14\u00a0December 2022 (6) Member of the Board of Directors, the RNGC and the ECSC until 12\u00a0April 2022. (7) Member of the Board of Directors until 12\u00a0April 2022. |
The Company\u2019s shares are exclusively ordinary shares with a par value of \u20ac\u20091.00. The following table shows the development of the number of shares issued and fully paid:
(In number of shares) | 2022 | 2021 |
|---|---|---|
Issued at 1\u00a0January | 786,083,690 | 784,149,270 |
Issued for ESOP | 2,121,318 | 1,934,420 |
Issued at 31\u00a0December | 788,205,008 | 786,083,690 |
Treasury shares | (647,500) | (454,735) |
Outstanding at 31\u00a0December | 787,557,508 | 785,628,955 |
Holders of ordinary shares are entitled to dividends and to one vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including purchased treasury shares) amounts to \u20ac\u200912,950\u00a0million (2021: \u20ac\u20099,466\u00a0million) representing an increase of \u20ac\u2009+3,484\u00a0million. This is mainly due to the net income for the period of \u20ac\u2009+4,247\u00a0million and a change in actuarial gains and losses of \u20ac\u2009+3,432\u00a0million, partly offset by the mark to market revaluation of the hedge portfolio of \u20ac\u2009-2,240\u00a0million, the change in fair value of financial assets of \u20ac -1,091\u00a0million and a dividend payment of \u20ac -1,181\u00a0million (1.50\u00a0\u20ac per share).
Capital stock comprises the nominal amount of shares outstanding. The addition to capital stock represents the contribution for exercised options by employees of \u20ac\u20092,121,318 (2021: \u20ac\u20091,934,420) in compliance with the implemented ESOPs.
Share premium mainly results from contributions in kind in the course of the creation of the Company, cash contributions from the Company\u2019s initial public offering, capital increases and reductions due to the issuance and cancellation of shares.
Retained earnings include mainly the profit for the period and the changes in other comprehensive income from remeasurements of the defined benefit pension plans net of tax which amounts to \u20ac\u2009+3,432\u00a0million in 2022 (2021: +2,363\u00a0million).
On 12\u00a0April 2022, the Annual General Meeting (\u201cAGM\u201d) decided to distribute a gross amount of \u20ac\u20091.50 per share, which was paid on 21\u00a0April 2022. For the fiscal year 2022, the Company\u2019s Board of Directors proposes a cash distribution payment of \u20ac\u00a01.80 per share.
Treasury shares represent the amount paid or payable for own shares held in treasury. During 2022, the number of treasury stock held by the Company increased to 647,500 compared to 454,735 as of 31\u00a0December 2021, mainly due to the share buybacks partly offset by vested shares in 2022 under LTIP 2018 (see \u201c\u2013 Note\u00a033: Share-based Payment\u201d). No shares were sold back to the market nor cancelled (2021: 0\u00a0shares).
On 12\u00a0April 2022, the AGM of the Company authorised the Board of Directors, for a period expiring at the AGM to be held in 2023, to issue shares and to grant rights to subscribe for shares in the Company\u2019s share capital for the purpose of:
For each operation, such powers shall not extend to issuing shares or granting rights to subscribe for shares if there is no preferential subscription right and for an aggregate issue price in excess of \u20ac\u2009500\u00a0million per share issuance.
On 14\u00a0April 2021, the AGM authorised the Board of Directors for an 18-month period to repurchase up to 10% of the Company\u2019s issued share capital at a price per share not less than the nominal value and not more than the higher of the price of the last independent trade and the highest current independent bid on the trading venues of the regulated market of the country in which the purchase is carried out.
Furthermore, the AGM authorised the Board of Directors to determine on a case by case basis the share repurchase programmes to be implemented by the Company, if any.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-65": { "value": "The Company\u2019s shares are exclusively ordinary shares with a par value of \u20ac\u20091.00. The following table shows the development of the number of shares issued and fully paid:
(In number of shares) | 2022 | 2021 |
|---|---|---|
Issued at 1\u00a0January | 786,083,690 | 784,149,270 |
Issued for ESOP | 2,121,318 | 1,934,420 |
Issued at 31\u00a0December | 788,205,008 | 786,083,690 |
Treasury shares | (647,500) | (454,735) |
Outstanding at 31\u00a0December | 787,557,508 | 785,628,955 |
Holders of ordinary shares are entitled to dividends and to one vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including purchased treasury shares) amounts to \u20ac\u200912,950\u00a0million (2021: \u20ac\u20099,466\u00a0million) representing an increase of \u20ac\u2009+3,484\u00a0million. This is mainly due to the net income for the period of \u20ac\u2009+4,247\u00a0million and a change in actuarial gains and losses of \u20ac\u2009+3,432\u00a0million, partly offset by the mark to market revaluation of the hedge portfolio of \u20ac\u2009-2,240\u00a0million, the change in fair value of financial assets of \u20ac -1,091\u00a0million and a dividend payment of \u20ac -1,181\u00a0million (1.50\u00a0\u20ac per share).
Capital stock comprises the nominal amount of shares outstanding. The addition to capital stock represents the contribution for exercised options by employees of \u20ac\u20092,121,318 (2021: \u20ac\u20091,934,420) in compliance with the implemented ESOPs.Treasury shares represent the amount paid or payable for own shares held in treasury. During 2022, the number of treasury stock held by the Company increased to 647,500 compared to 454,735 as of 31\u00a0December 2021, mainly due to the share buybacks partly offset by vested shares in 2022 under LTIP 2018 (see \u201c\u2013 Note\u00a033: Share-based Payment\u201d). No shares were sold back to the market nor cancelled (2021: 0\u00a0shares).On 12\u00a0April 2022, the AGM of the Company authorised the Board of Directors, for a period expiring at the AGM to be held in 2023, to issue shares and to grant rights to subscribe for shares in the Company\u2019s share capital for the purpose of:
For each operation, such powers shall not extend to issuing shares or granting rights to subscribe for shares if there is no preferential subscription right and for an aggregate issue price in excess of \u20ac\u2009500\u00a0million per share issuance.
On 14\u00a0April 2021, the AGM authorised the Board of Directors for an 18-month period to repurchase up to 10% of the Company\u2019s issued share capital at a price per share not less than the nominal value and not more than the higher of the price of the last independent trade and the highest current independent bid on the trading venues of the regulated market of the country in which the purchase is carried out.
Furthermore, the AGM authorised the Board of Directors to determine on a case by case basis the share repurchase programmes to be implemented by the Company, if any.", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f12695": { "value": "Treasury shares represent the amount paid or payable for own shares held in treasury. During 2022, the number of treasury stock held by the Company increased to 647,500 compared to 454,735 as of 31\u00a0December 2021, mainly due to the share buybacks partly offset by vested shares in 2022 under LTIP 2018 (see \u201c\u2013 Note\u00a033: Share-based Payment\u201d). No shares were sold back to the market nor cancelled (2021: 0\u00a0shares).On 12\u00a0April 2022, the AGM of the Company authorised the Board of Directors, for a period expiring at the AGM to be held in 2023, to issue shares and to grant rights to subscribe for shares in the Company\u2019s share capital for the purpose of:
For each operation, such powers shall not extend to issuing shares or granting rights to subscribe for shares if there is no preferential subscription right and for an aggregate issue price in excess of \u20ac\u2009500\u00a0million per share issuance.
On 14\u00a0April 2021, the AGM authorised the Board of Directors for an 18-month period to repurchase up to 10% of the Company\u2019s issued share capital at a price per share not less than the nominal value and not more than the higher of the price of the last independent trade and the highest current independent bid on the trading venues of the regulated market of the country in which the purchase is carried out.
Furthermore, the AGM authorised the Board of Directors to determine on a case by case basis the share repurchase programmes to be implemented by the Company, if any.", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-66": { "value": "The Company seeks to maintain a strong financial profile to safeguard its going concern, financial flexibility as well as shareholders\u2019, credit investors\u2019 and other stakeholders\u2019 confidence in the Company. Consequently, operating liquidity is of great importance.
As part of its capital management, it is one of the Company\u2019s objectives to maintain a strong credit rating by institutional rating agencies. This enables the Company to contain its cost of capital which positively impacts its stakeholder value (entity value). Next to other non-financial parameters, the credit rating is based on financial indicators such as cash flow, profitability, leverage ratios and liquidity ratios. The Company monitors these ratios to keep them in a range compatible with a strong rating.
Rating agency | Long-term rating | Outlook | Short-term rating |
|---|---|---|---|
Standard and Poor\u2019s | A | Stable | A-1 |
Moody\u2019s Investors Services | A2 | Stable | P1 |
Fitch Rating (unsolicited) | BBB+ | Stable | F1 |
The stand-alone rating reflects the Company\u2019s strong backlog providing revenue visibility, dominant market position in the single-aisle market, operating performance and overall its strong positioning to benefit from the recovery in air travel demand. It also reflects Airbus\u2019 exceptional liquidity, solid balance sheet as well as its prudent financial policy. Finally, it reflects the management\u2019s focus on programmes execution, profitability and cash generation improvement.
In accordance with the Company\u2019s conservative financial policy, a strong rating is key to maintain a wide array of funding sources at competitive conditions, to have broad access to long-term hedging and to strengthen the Company\u2019s position as a financially sound counterparty for its customers and suppliers.
Every year, the Company constructs a five-year plan used to assess its financial flexibility at current ratings and a value creation ambition. It is composed of (i)\u00a0EBIT and (ii)\u00a0Free Cash Flow, which is defined as Cash provided by operating activities and Cash used for investing activities less Change of securities, Contribution to plan assets for pensions, realised Treasury swaps and bank activities.
The Company uses the WACC to determine the Net Present Value (\u201cNPV\u201d), which is used for any investment decision.
The Company also monitors the level of dividends paid to its shareholders.
The Company generally satisfies its obligations arising from ESOPs and Share Incentive Plans (\u201cSIPs\u201d) by issuing new shares. In order to avoid any dilution of its current shareholders out of LTIPs, the Company performs share buybacks to meet its obligations to its employees, following the decisions of the Board of Directors and approval of the AGM. Apart from this purpose, the Company generally does not trade with treasury shares.
The Company complies with the capital requirements under applicable law and its Articles of Association.", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f12787": { "value": "The net cash position provides financial flexibility to fund the Company\u2019s operations, to react to business needs and risk profile and to return capital to the shareholders.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cash and cash equivalents | 15,823 | 14,572 |
Current securities | 1,762 | 1,317 |
Non-current securities | 6,013 | 6,794 |
Gross cash position | 23,598 | 22,683 |
Short-term financing liabilities | (2,142) | (1,946) |
Long-term financing liabilities | (10,631) | (13,094) |
Interest rate contracts\u00a0(1) | (1,394) | 97 |
Total | 9,431 | 7,740 |
(1) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance. |
The net cash position on 31\u00a0December 2022 amounted to \u20ac\u20099,431\u00a0million (2021: \u20ac\u20097,740\u00a0million), with a gross cash position of \u20ac\u200923,598\u00a0million (2021: \u20ac\u200922,683\u00a0million).
Derivative instruments recognised on the Company\u2019s Statement of Financial Position consist of (i)\u00a0instruments that are entered into as hedges of the Company\u2019s operating activities or interest result, and (ii)\u00a0embedded foreign currency derivatives that arise from separating the foreign currency component from certain operating contracts. Cash flows resulting from the settlement of these derivatives are therefore recorded as part of cash flow from operations. Similarly, financial assets and liabilities arising from customer financing activities and refundable advances from European Governments are considered part of operating activities and related cash flows are hence recognised as cash flows from operating activities.Cash and cash equivalents are composed of the following elements:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bank account and petty cash | 3,687 | 1,964 |
Short-term securities (at fair value through profit or loss) | 11,135 | 12,075 |
Short-term securities (at fair value through OCI) | 1,001 | 533 |
Total cash and cash equivalents | 15,823 | 14,572 |
Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, are recognised in cash equivalents.
Cash and cash equivalents have increased by \u20ac +1.3\u00a0billion from \u20ac\u200914.6\u00a0billion at 31\u00a0December 2021 to \u20ac\u200915.8\u00a0billion at 31\u00a0December 2022. They include payments received in advance from certain customers and payments made to suppliers in anticipation.
The main variations are as follows:
Cash provided by operating activities amounts to \u20ac +6.3\u00a0billion in 2022, mainly driven by a profit translated into cash, a positive phasing impact from contracts assets and liabilities reflecting higher advance payments and a positive impact from net payments made to suppliers in anticipation. It also reflects an increase in trade liabilities driven by higher volume and payment terms increase linked to certain agreements reached with suppliers. It is partly offset by the increase in inventory.
Cash used for investing activities amounts to \u20ac -3.1\u00a0billion, mainly reflecting capital expenditures.\u00a0
Cash used for financing activities amounts to \u20ac -2.1\u00a0billion. It mainly includes the cash distribution to Airbus\u00a0SE shareholders of \u20ac -1.2\u00a0billion and the bond buyback of \u20ac -1.0\u00a0billion.
Similar to previous years, the Company has supported its suppliers concerning supply chain financing arrangements. As of 31\u00a0December 2022, these arrangements have no impact on the Company\u2019s Consolidated Financial Statements. The Company evaluates such suppliers\u2019 early payment arrangements against a number of indicators to assess whether the payable continues to hold the characteristics of a trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed customary payment terms in the industry. As at 31\u00a0December 2022, the payables subject to supplier financing arrangements do not meet the criteria to be reclassified as borrowings.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f12788": { "value": "The net cash position provides financial flexibility to fund the Company\u2019s operations, to react to business needs and risk profile and to return capital to the shareholders.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cash and cash equivalents | 15,823 | 14,572 |
Current securities | 1,762 | 1,317 |
Non-current securities | 6,013 | 6,794 |
Gross cash position | 23,598 | 22,683 |
Short-term financing liabilities | (2,142) | (1,946) |
Long-term financing liabilities | (10,631) | (13,094) |
Interest rate contracts\u00a0(1) | (1,394) | 97 |
Total | 9,431 | 7,740 |
(1) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance. |
The net cash position on 31\u00a0December 2022 amounted to \u20ac\u20099,431\u00a0million (2021: \u20ac\u20097,740\u00a0million), with a gross cash position of \u20ac\u200923,598\u00a0million (2021: \u20ac\u200922,683\u00a0million).
Derivative instruments recognised on the Company\u2019s Statement of Financial Position consist of (i)\u00a0instruments that are entered into as hedges of the Company\u2019s operating activities or interest result, and (ii)\u00a0embedded foreign currency derivatives that arise from separating the foreign currency component from certain operating contracts. Cash flows resulting from the settlement of these derivatives are therefore recorded as part of cash flow from operations. Similarly, financial assets and liabilities arising from customer financing activities and refundable advances from European Governments are considered part of operating activities and related cash flows are hence recognised as cash flows from operating activities.The majority of the Company\u2019s securities consists of debt securities and are classified at fair value through OCI (see \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d).
The Company\u2019s securities portfolio amounts to \u20ac\u20097,775\u00a0million and \u20ac\u20098,111\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The security portfolio contains a non-current portion of \u20ac\u20096,013\u00a0million (2021: \u20ac\u20096,794\u00a0million), and a current portion of \u20ac\u20091,762\u00a0million (2021: \u20ac\u20091,317\u00a0million).
Included in the securities portfolio as of 31\u00a0December 2022 and 2021, respectively, are corporate and government bonds bearing either fixed rate coupons (\u20ac\u20098,368\u00a0million nominal value; 2021: \u20ac\u20097,866\u00a0million) or floating rate coupons (\u20ac\u200932\u00a0million nominal value; 2021: \u20ac\u2009103\u00a0million), and foreign currency funds of fixed income funds (\u20ac\u20090\u00a0million fair value; 2021: \u20ac\u20092\u00a0million).
When the Company enters into securities lending or other financing activities that involve the pledging of securities as collateral, the securities pledged continue to be recognised on the balance sheet. As of 31\u00a0December 2022 and 2021, they were no securities pledged as collateral for borrowings from banks.
Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.
Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bonds and commercial papers | 8,681 | 11,061 |
Liabilities to financial institutions | 383 | 467 |
Loans | 75 | 75 |
Lease liabilities | 1,492 | 1,491 |
Total long term financing liabilities | 10,631 | 13,094 |
Bonds and commercial papers | 0 | 0 |
Liabilities to financial institutions | 27 | 26 |
Loans | 83 | 96 |
Lease liabilities | 242 | 245 |
Others\u00a0(1) | 1,790 | 1,579 |
Total short term financing liabilities | 2,142 | 1,946 |
Total | 12,773 | 15,040 |
(1) Included in \u201cothers\u201d are financing liabilities to joint ventures. |
Long-term financing liabilities, mainly comprising of bonds and lease liabilities,\u00a0decreased\u00a0by \u20ac\u00a0-2,463\u00a0million to \u20ac\u200910,631\u00a0million (2021: \u20ac\u200913,094\u00a0million), mainly due to the decrease in the value of bonds linked to higher interest rates and a \u20ac\u20091\u00a0billion bond buyback performed in June\u00a02022.
Short-term financing liabilities increased by \u20ac\u00a0+196\u00a0million to \u20ac\u20092,142\u00a0million (2021: \u20ac\u20091,946\u00a0million).
The Company has several euro-denominated bonds issued under its EMTN programme and two stand-alone US dollar-denominated bonds issued on the US institutional market under Rule 144A, outstanding as of 31\u00a0December 2022.
The Company can issue commercial papers under its \u20ac\u200911\u00a0billion Negotiable European Commercial Paper (\u201cNEuCP\u201d) programme, its \u20ac4\u00a0billion Euro Commercial Paper (\u201cECP\u201d) programme and its $ 3\u00a0billion US Commercial Paper programme.
As of\u00a031\u00a0December 2022, there were\u00a0no outstanding amounts\u00a0under\u00a0any of its commercial paper programmes.
The terms and repayment schedules of these bonds and loans are as follows:
Principal amount (In million) | Carrying amount (In \u20ac million) | Issuance | Coupon or interest | Effective interest | Maturity | Additional | ||
|---|---|---|---|---|---|---|---|---|
31 December | ||||||||
2022 | 2021 | |||||||
EMTN 15\u00a0years | \u20ac\u2009500 | 444 | 525 | Oct 2014 | 2.12% | 2.21% | Oct 2029 | Interest rate swapped into 3M Euribor +0.84% |
EMTN 10\u00a0years | \u20ac\u2009823 | 799 | 1,043 | Apr 2014 | 2.38% | 2.42% | Apr 2024 | Interest rate swapped into 3M Euribor +1.40% |
EMTN 10\u00a0years | \u20ac\u2009461 | 419 | 645 | May\u00a02016 | 0.88% | 0.98% | May\u00a02026 | Interest rate swapped into 3M Euribor +0.50% |
EMTN 15\u00a0years | \u20ac\u2009900 | 737 | 903 | May\u00a02016 | 1.38% | 1.50% | May\u00a02031 | Interest rate swapped into 3M Euribor +0.66% |
EMTN 5\u00a0years | \u20ac\u2009561 | 515 | 732 | Mar 2020 | 1.63% | 1.80% | April\u00a02025 | Interest rate swapped into 3M Euribor +2.01% |
EMTN 8\u00a0years | \u20ac\u2009611 | 512 | 725 | Mar 2020 | 2.00% | 2.10% | April\u00a02028 | Interest rate swapped into 3M Euribor +2.15% |
EMTN 12\u00a0years | \u20ac\u20091,000 | 754 | 957 | Mar\u00a02020 | 2.38% | 2.49% | April\u00a02032 | Interest rate swapped into 3M Euribor +2.24% |
EMTN 20\u00a0years | \u20ac\u20091,000 | 646 | 958 | June 2020 | 2.38% | 2.44% | June\u00a02040 | Interest rate swapped into 3M Euribor +1.93% |
EMTN 6\u00a0years | \u20ac\u2009894 | 792 | 1,215 | June\u00a02020 | 1.38% | 1.47% | June\u00a02026 | Interest rate swapped into 3M Euribor +1.66% |
EMTN 10\u00a0years | \u20ac\u20091,250 | 989 | 1,200 | June\u00a02020 | 1.63% | 1.74% | June\u00a02030 | Interest rate swapped into 3M Euribor +1.61% |
US$ Bond 10\u00a0years | US$ 750 | 653 | 694 | Apr 2017 | 3.15% | 3.20% | Apr 2027 | Interest rate swapped into 3M Libor +0.87% |
US$ Bond 30\u00a0years | US$ 750 | 643 | 731 | Apr 2017 | 3.95% | 4.02% | Apr 2047 | Interest rate swapped into 3M Libor +1.61% |
ACLP Private placement | US$ 830 | 778 | 733 | July\u00a02020,\u00a0 | 1.98% - 2.54% | 2.77% - 3.09% | July\u00a02026 to July\u00a02029 | |
Bonds | 8,681 | 11,061 | ||||||
Others | 410 | 493 | ||||||
Liabilities to financial institutions | 410 | 493 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2022 is as follows:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at\u00a0 | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 11,061 | (989) | 0 | 126 | (1,517) | 8,681 |
Liabilities to financial institutions | 493 | (83) | 0 | 0 | 0 | 410 |
Loans | 171 | (63) | 49 | 1 | 0 | 158 |
Finance lease liabilities | 1,736 | (262) | 0 | 32 | 228 | 1,734 |
Others | 1,579 | 220 | 0 | (9) | 0 | 1,790 |
Total | 15,040 | (1,177) | 49 | 150 | (1,289) | 12,773 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2021 is as follows\u00a0:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 13,107 | (1,903) | 0 | 168 | (311) | 11,061 |
Liabilities to financial institutions | 529 | (48) | 0 | 12 | 0 | 493 |
Loans | 188 | (23) | 0 | 6 | 0 | 171 |
Finance lease liabilities | 1,798 | (400) | 0 | 58 | 280 | 1,736 |
Others | 1,473 | 79 | 0 | 27 | 0 | 1,579 |
Total | 17,095 | (2,295) | 0 | 271 | (31) | 15,040 |
The net cash position provides financial flexibility to fund the Company\u2019s operations, to react to business needs and risk profile and to return capital to the shareholders.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Cash and cash equivalents | 15,823 | 14,572 |
Current securities | 1,762 | 1,317 |
Non-current securities | 6,013 | 6,794 |
Gross cash position | 23,598 | 22,683 |
Short-term financing liabilities | (2,142) | (1,946) |
Long-term financing liabilities | (10,631) | (13,094) |
Interest rate contracts\u00a0(1) | (1,394) | 97 |
Total | 9,431 | 7,740 |
(1) The Company has decided to refine the net cash definition to include interest rate contracts related to fair value hedges, which is also reflected in the 2022 balance. |
The net cash position on 31\u00a0December 2022 amounted to \u20ac\u20099,431\u00a0million (2021: \u20ac\u20097,740\u00a0million), with a gross cash position of \u20ac\u200923,598\u00a0million (2021: \u20ac\u200922,683\u00a0million).
Derivative instruments recognised on the Company\u2019s Statement of Financial Position consist of (i)\u00a0instruments that are entered into as hedges of the Company\u2019s operating activities or interest result, and (ii)\u00a0embedded foreign currency derivatives that arise from separating the foreign currency component from certain operating contracts. Cash flows resulting from the settlement of these derivatives are therefore recorded as part of cash flow from operations. Similarly, financial assets and liabilities arising from customer financing activities and refundable advances from European Governments are considered part of operating activities and related cash flows are hence recognised as cash flows from operating activities.The majority of the Company\u2019s securities consists of debt securities and are classified at fair value through OCI (see \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d).
The Company\u2019s securities portfolio amounts to \u20ac\u20097,775\u00a0million and \u20ac\u20098,111\u00a0million as of 31\u00a0December 2022 and 2021, respectively. The security portfolio contains a non-current portion of \u20ac\u20096,013\u00a0million (2021: \u20ac\u20096,794\u00a0million), and a current portion of \u20ac\u20091,762\u00a0million (2021: \u20ac\u20091,317\u00a0million).
Included in the securities portfolio as of 31\u00a0December 2022 and 2021, respectively, are corporate and government bonds bearing either fixed rate coupons (\u20ac\u20098,368\u00a0million nominal value; 2021: \u20ac\u20097,866\u00a0million) or floating rate coupons (\u20ac\u200932\u00a0million nominal value; 2021: \u20ac\u2009103\u00a0million), and foreign currency funds of fixed income funds (\u20ac\u20090\u00a0million fair value; 2021: \u20ac\u20092\u00a0million).
When the Company enters into securities lending or other financing activities that involve the pledging of securities as collateral, the securities pledged continue to be recognised on the balance sheet. As of 31\u00a0December 2022 and 2021, they were no securities pledged as collateral for borrowings from banks.
Financing liabilities include debt obligations towards financial institutions, issued corporate bonds, deposits made by customers of Airbus Bank, borrowings received from joint ventures and other parties as well as finance lease liabilities. Financing liabilities are recorded initially at the fair value of the proceeds received, net of transaction costs incurred. Subsequently, financing liabilities are measured at amortised cost, using the effective interest rate method with any difference between proceeds (net of transaction costs) and redemption amount being recognised in total finance income (cost) over the period of the financing liability.
Financing liabilities to financial institutions may include liabilities from securities lending transactions. In securities lending transactions, the Company receives cash from its counterparty and transfers the securities subject to the lending transaction as collateral. The counterparty typically has the right to sell or repledge the securities pledged. The amount of cash received is recognised as a financing liability. The securities pledged are not derecognised, but remain on the Company\u2019s Statement of Financial Position.
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Bonds and commercial papers | 8,681 | 11,061 |
Liabilities to financial institutions | 383 | 467 |
Loans | 75 | 75 |
Lease liabilities | 1,492 | 1,491 |
Total long term financing liabilities | 10,631 | 13,094 |
Bonds and commercial papers | 0 | 0 |
Liabilities to financial institutions | 27 | 26 |
Loans | 83 | 96 |
Lease liabilities | 242 | 245 |
Others\u00a0(1) | 1,790 | 1,579 |
Total short term financing liabilities | 2,142 | 1,946 |
Total | 12,773 | 15,040 |
(1) Included in \u201cothers\u201d are financing liabilities to joint ventures. |
Long-term financing liabilities, mainly comprising of bonds and lease liabilities,\u00a0decreased\u00a0by \u20ac\u00a0-2,463\u00a0million to \u20ac\u200910,631\u00a0million (2021: \u20ac\u200913,094\u00a0million), mainly due to the decrease in the value of bonds linked to higher interest rates and a \u20ac\u20091\u00a0billion bond buyback performed in June\u00a02022.
Short-term financing liabilities increased by \u20ac\u00a0+196\u00a0million to \u20ac\u20092,142\u00a0million (2021: \u20ac\u20091,946\u00a0million).
The Company has several euro-denominated bonds issued under its EMTN programme and two stand-alone US dollar-denominated bonds issued on the US institutional market under Rule 144A, outstanding as of 31\u00a0December 2022.
The Company can issue commercial papers under its \u20ac\u200911\u00a0billion Negotiable European Commercial Paper (\u201cNEuCP\u201d) programme, its \u20ac4\u00a0billion Euro Commercial Paper (\u201cECP\u201d) programme and its $ 3\u00a0billion US Commercial Paper programme.
As of\u00a031\u00a0December 2022, there were\u00a0no outstanding amounts\u00a0under\u00a0any of its commercial paper programmes.
The terms and repayment schedules of these bonds and loans are as follows:
Principal amount (In million) | Carrying amount (In \u20ac million) | Issuance | Coupon or interest | Effective interest | Maturity | Additional | ||
|---|---|---|---|---|---|---|---|---|
31 December | ||||||||
2022 | 2021 | |||||||
EMTN 15\u00a0years | \u20ac\u2009500 | 444 | 525 | Oct 2014 | 2.12% | 2.21% | Oct 2029 | Interest rate swapped into 3M Euribor +0.84% |
EMTN 10\u00a0years | \u20ac\u2009823 | 799 | 1,043 | Apr 2014 | 2.38% | 2.42% | Apr 2024 | Interest rate swapped into 3M Euribor +1.40% |
EMTN 10\u00a0years | \u20ac\u2009461 | 419 | 645 | May\u00a02016 | 0.88% | 0.98% | May\u00a02026 | Interest rate swapped into 3M Euribor +0.50% |
EMTN 15\u00a0years | \u20ac\u2009900 | 737 | 903 | May\u00a02016 | 1.38% | 1.50% | May\u00a02031 | Interest rate swapped into 3M Euribor +0.66% |
EMTN 5\u00a0years | \u20ac\u2009561 | 515 | 732 | Mar 2020 | 1.63% | 1.80% | April\u00a02025 | Interest rate swapped into 3M Euribor +2.01% |
EMTN 8\u00a0years | \u20ac\u2009611 | 512 | 725 | Mar 2020 | 2.00% | 2.10% | April\u00a02028 | Interest rate swapped into 3M Euribor +2.15% |
EMTN 12\u00a0years | \u20ac\u20091,000 | 754 | 957 | Mar\u00a02020 | 2.38% | 2.49% | April\u00a02032 | Interest rate swapped into 3M Euribor +2.24% |
EMTN 20\u00a0years | \u20ac\u20091,000 | 646 | 958 | June 2020 | 2.38% | 2.44% | June\u00a02040 | Interest rate swapped into 3M Euribor +1.93% |
EMTN 6\u00a0years | \u20ac\u2009894 | 792 | 1,215 | June\u00a02020 | 1.38% | 1.47% | June\u00a02026 | Interest rate swapped into 3M Euribor +1.66% |
EMTN 10\u00a0years | \u20ac\u20091,250 | 989 | 1,200 | June\u00a02020 | 1.63% | 1.74% | June\u00a02030 | Interest rate swapped into 3M Euribor +1.61% |
US$ Bond 10\u00a0years | US$ 750 | 653 | 694 | Apr 2017 | 3.15% | 3.20% | Apr 2027 | Interest rate swapped into 3M Libor +0.87% |
US$ Bond 30\u00a0years | US$ 750 | 643 | 731 | Apr 2017 | 3.95% | 4.02% | Apr 2047 | Interest rate swapped into 3M Libor +1.61% |
ACLP Private placement | US$ 830 | 778 | 733 | July\u00a02020,\u00a0 | 1.98% - 2.54% | 2.77% - 3.09% | July\u00a02026 to July\u00a02029 | |
Bonds | 8,681 | 11,061 | ||||||
Others | 410 | 493 | ||||||
Liabilities to financial institutions | 410 | 493 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2022 is as follows:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at\u00a0 | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 11,061 | (989) | 0 | 126 | (1,517) | 8,681 |
Liabilities to financial institutions | 493 | (83) | 0 | 0 | 0 | 410 |
Loans | 171 | (63) | 49 | 1 | 0 | 158 |
Finance lease liabilities | 1,736 | (262) | 0 | 32 | 228 | 1,734 |
Others | 1,579 | 220 | 0 | (9) | 0 | 1,790 |
Total | 15,040 | (1,177) | 49 | 150 | (1,289) | 12,773 |
Reconciliation of liabilities arising from financing liabilities as of 31 December 2021 is as follows\u00a0:
(In \u20ac million) | Balance at | Cash flows | Non-cash movements | Balance at | ||
|---|---|---|---|---|---|---|
Changes in scope | Foreign exchange movements | Others | ||||
Bonds and commercial papers | 13,107 | (1,903) | 0 | 168 | (311) | 11,061 |
Liabilities to financial institutions | 529 | (48) | 0 | 12 | 0 | 493 |
Loans | 188 | (23) | 0 | 6 | 0 | 171 |
Finance lease liabilities | 1,798 | (400) | 0 | 58 | 280 | 1,736 |
Others | 1,473 | 79 | 0 | 27 | 0 | 1,579 |
Total | 17,095 | (2,295) | 0 | 271 | (31) | 15,040 |
By the nature of its activities, the Company is exposed to a variety of financial risks: (i)\u00a0market risks, in particular foreign exchange risk, but also interest rate risk, equity price risk and commodity price risk, (ii)\u00a0liquidity risk and (iii)\u00a0credit risk. The Company\u2019s overall financial risk management activities focus on mitigating unpredictable financial market risks and their potential adverse effects on the Company\u2019s operational and financial performance.
The financial risk management of the Company is generally carried out by the Treasury department of the Company under policies approved by the Board of Directors or by the Chief Financial Officer. The identification, evaluation and hedging of the financial risks is in the joint responsibility of several established specific committees such as the Foreign Exchange Committee and the Asset Liability Management Committee, including the Company business segments.
The Company uses financial derivatives solely for risk mitigating purposes (\u201chedging\u201d) and applies hedge accounting for a significant portion of its hedging portfolio.
Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.
The Company\u2019s policy is to maintain sufficient cash and cash equivalents at any time to meet its present and future commitments as they fall due. It manages its liquidity by holding adequate volumes of liquid assets and maintains a committed revolving credit facility,\u00a0in addition to the cash inflow generated by its operating business. The Company continues to keep the focus on low counterparty risk within its asset portfolio. In addition, it maintains a set of other funding sources, and accordingly may raise loans from commercial banks and Development Finance Institutions and issue bonds, notes and commercial papers or enter into security lending agreements. Adverse changes in the capital markets could increase its funding costs and limit its financial flexibility.
In particular, Airbus signed on 5\u00a0July 2022 a \u20ac\u20098\u00a0billion Sustainability Linked Revolving Syndicated Credit Facility in order to refinance its \u20ac\u20096\u00a0billion existing facility signed in 2020.
Management considers the Company has sufficient resources to continue operating for at least 12\u00a0months and that there are no material uncertainties about the Company\u2019s ability to continue as a going concern.
Further, the management of the vast majority of the Company\u2019s liquidity exposure is centralised by a daily cash concentration process. This process enables it to manage its liquidity surplus as well as its liquidity requirements according to the actual needs of its subsidiaries. In addition, management monitors the Company\u2019s liquidity reserve as well as the expected cash flows from its operations.
The contractual maturities of the Company\u2019s financial liabilities, based on undiscounted cash flows and including interest payments, if applicable, are as follows:
(In \u20ac million) | Carrying amount | Contractual cash flows | < 1 year | 1 year - | 2 years - | 3 years - | 4 years - | > 5 years |
|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||
Non-derivative financial liabilities | (26,753) | (29,230) | (15,885) | (1,791) | (936) | (1,760) | (1,192) | (7,666) |
Derivative financial liabilities | (9,613) | (10,861) | (3,538) | (2,647) | (1,610) | (1,118) | (537) | (1,411) |
Total | (36,366) | (40,091) | (19,423) | (4,438) | (2,546) | (2,878) | (1,729) | (9,077) |
31\u00a0December 2021 | ||||||||
Non-derivative financial liabilities | (25,387) | (27,962) | (12,072) | (1,000) | (1,539) | (1,095) | (2,381) | (9,875) |
Derivative financial liabilities | (4,563) | (6,193) | (1,887) | (1,661) | (1,245) | (728) | (440) | (232) |
Total | (29,950) | (34,155) | (13,959) | (2,661) | (2,784) | (1,823) | (2,821) | (10,107) |
Non-derivative financial liabilities included in the table above comprise financing liabilities as presented in \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d. Due to their specific nature, namely their risk-sharing features and uncertainty about the repayment dates, the European Governments\u2019 refundable advances, which amount to \u20ac -3,857\u00a0million at 31\u00a0December 2022 (\u20ac\u2009-3,861\u00a0million at 31\u00a0December 2021) are not included.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is as follows:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | (241) | (245) |
Later than one year and not later than five years | (747) | (758) |
Later than five years | (1,036) | (1,043) |
Total undiscounted lease liabilities | (2,024) | (2,046) |
Lease liabilities included in the statement of financial position | (1,734) | (1,736) |
Current | (242) | (245) |
Non-current | (1,492) | (1,491) |
The Company is exposed to credit risk to the extent of non-performance by either its customers (e.g. airlines) or its counterparts with regard to financial instruments or issuers of financial instruments for gross cash investments. However, it has policies in place to avoid concentrations of credit risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk resulting from financial instruments is managed by the Company. In order to ensure sufficient diversification, a credit limit system is used.
The Company monitors the performance of the individual financial instruments and the impact of market developments on their performance and takes appropriate action on foreseeable adverse development based on pre-defined procedures and escalation levels.
Sales of products and services are made to customers after having conducted appropriate internal credit risk assessment. In order to support sales, primarily at Airbus, Airbus Helicopters and ATR, the Company may agree to participate in customer financing, on a case-by-case basis either directly or through guarantees provided to third parties. In determining the amount and terms of the financing transaction, the Company takes into account the airline\u2019s credit rating and economic factors reflecting the relevant financial market conditions, together with appropriate assumptions as to the anticipated future value of the financed asset.
The booked amount of financial assets represents the maximum credit exposure. The credit quality of financial assets can be assessed by reference to external credit rating (if available) or internal assessment of customers\u2019 creditworthiness e.g. airlines by way of internal risk pricing methods. For further information relating to gross credit risk and impairment see \u201c\u2013 Note\u00a038.7: Impairment Losses\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-70": { "value": "Foreign exchange risk \u2014 Foreign exchange risk arises when future commercial transactions or firm commitments, recognised monetary assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity\u2019s functional currency.
The Company manages a long-term hedge portfolio with maturities of several years covering its net exposure to US dollar sales, mainly from the commercial activities of Airbus. This hedge portfolio covers a large portion of the Company\u2019s firm commitments and highly probable forecasted transactions.
For Airbus, the highly probable criteria of the underlying foreign currency exposure of cash flow hedges is assessed based on the IFRS15 backlog value analysis. This consists in reducing the contractual firm backlog by all deliveries which cannot be considered as highly probable due to the existence of either cancellation rights, risk of bankruptcy or other risk of order restructuring. The latter assessments is taking into account customers\u2019 situation and commercial aspects. The resulting backlog is further adjusted to the foreign exchange management hedging horizon. The highly probable underlying foreign currency exposure is then capped to the production plan when applicable.
Most of the Company\u2019s revenue is denominated in US dollars, while a major portion of its costs is incurred in euro and to a lesser extent in other foreign currencies. Consequently, to the extent that the Company does not use financial instruments to hedge its exposure resulting from this currency mismatch, its profits will be affected by changes in the \u20ac/US$ exchange rate. As the Company intends to generate profits primarily from its operations rather than through speculation on exchange rate movements, it uses hedging strategies to manage and minimise the impact of exchange rate fluctuations on these profits.
With respect to its commercial aircraft products, as of 30\u00a0June 2018, the Company adopted a new hedge strategy to hedge its net exposure (US dollar revenue less US dollar cost) resulting from commercial aircraft deliveries of specific aircraft types. The strategy more closely aligns hedge accounting with risk management activities.
Under the new strategy the foreign exchange derivatives used as hedging instruments are designated as a hedge of a portion of the cash flows received for each of a number of deliveries of a specific aircraft type that are expected to occur in a given month and hence will allow the hedge result to move along with the hedged deliveries in the event of a shift in deliveries.
If such a shift in hedged deliveries occurs, hedge ineffectiveness will arise to the extent the maturities of the hedging instrument and the expected timing of the hedged cash flows are no longer perfectly aligned. In order to minimise such ineffectiveness the Company will close the timing gap by rolling over hedges to new maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes in the spot element as the hedged risk in order to eliminate the ineffectiveness resulting from changes in forward points between different maturities. The forward element will be accounted for as a cost of hedging similar to the time value of options.
Until 30\u00a0June 2018, the Company typically hedged firmly committed sales in US dollar using a \u201cfirst flow approach\u201d. Under that approach, the foreign currency derivatives the Company entered into were designated as a hedge of the first US dollar inflows received from the customer at aircraft delivery in a given month. The strategy implied that only a portion of the expected monthly customer payments made at aircraft delivery were hedged and that a reduction of monthly cash inflows as a result of postponements or order cancellations had no impact on the effectiveness of the hedge as long as the actual gross US dollar cash inflows received at aircraft delivery in a particular month exceeded the portion designated as being hedged in that month. According to the prospective application requirement of IFRS\u00a09, the fair values of the legacy portfolio in place at inception of the new strategy continue to be assigned to the previous first flow hedge regime and remain in the hedge reserve in OCI, to be recognised in profit or loss only at maturity of the originally hedged cash flows (unless those cash flows are no longer expected to occur).
As a result of prospective application, the hedging instruments designated under the new strategy had a non-zero fair value at hedge inception, which might create some small ineffectiveness.
Another source of ineffectiveness is the counterparty credit risk inherent in the hedge portfolio. As such, credit risk is absent from the hedged cash flows. However, since netting arrangements are in place with all the hedge counterparties and the Company has a policy of trading with investment grade counterparties only, the credit risk arising from its hedging instruments, and associated changes in credit risk, have historically been negligible and are expected to remain so.
The Company also hedges its expected foreign currency exposure arising from US dollar or pound sterling cash outflows in the commercial aircraft business on a first outflow basis, though to a much lesser extent than US dollar cash inflows.
In military aircraft and non-aircraft businesses, the Company hedges inflows and outflows in foreign currencies from firmly committed or highly probable forecast sales and purchase contracts. Here, foreign currency derivatives are typically contracted in lower volumes; they may be accounted for using a first flow approach or are designated as hedges of specific agreed milestone payments. The amount of the expected flows to be hedged can cover up to 100% of the equivalent of the net US dollar exposure at inception. The coverage ratio considers the variability in the range of potential outcomes taking into account macroeconomic movements affecting spot rates and interest rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly committed cash flows are not fixed and subject to potentially significant delays, the Company may use rollover strategies, usually involving foreign exchange swaps.
For all foreign currency hedges of future cash flows which qualify for hedge accounting under IFRS\u00a09, the Company uses the cash flow hedge model, which requires (i)\u00a0recognising the effective portion of the fair value changes of the hedging derivatives in equity (within OCI) and (ii)\u00a0recognising the effect of the hedge in profit or loss when the hedged cash flows affect profit or loss.
In addition, the Company hedges currency risk arising from financial assets or liabilities denominated in currencies other than the euro, including foreign currency receivable and payable accounts, as well as foreign currency denominated funding transactions or securities. The Company applies hedge accounting if a mismatch in terms of profit or loss recognition of the hedging instrument and hedged item would otherwise occur. Frequently, however, the currency-induced gains or losses of the hedging instrument and the hedged item match in terms of profit or loss recognition (\u201cnatural hedge\u201d), so no hedge accounting is required. Sometimes such gains or losses may end up in different sections of the income statement (such as operating profit for the hedged item and financial result for the hedging instrument). If so, the Company may choose to present the gains or losses of both the hedging instrument and the hedged item in the same income statement line item if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign currency forwards, foreign currency options and to a minor extent non-derivative financial instruments. A hedge ratio of 1:1 is applied by the Company.
The Company also has foreign currency derivative instruments which are embedded in certain purchase contracts denominated in a currency other than the functional currency of any substantial party to the contract, principally in US dollar and pound sterling. If such embedded derivatives are required to be accounted for separately from the host purchase contract, related gains or losses are generally recognised in other financial result. However, if the embedded derivatives qualify for hedge accounting, the Company might choose to designate them as a hedging instrument in a hedge of foreign currency risk, in which case they are accounted for under the cash flow hedge model as described above.
Interest rate risk \u2014 The Company uses an asset-liability management approach with the objective to limit its interest rate risk. It undertakes to match the risk profile of its interest-bearing assets with those of its interest-bearing liabilities. The remaining net interest rate exposure is managed through several types of interest rate derivatives, such as interest rate swaps and interest rate futures contracts, in order to minimise risks and financial impacts.
The vast majority of related interest rate hedges qualify for hedge accounting, and most of them are accounted for under the fair value hedge model. As a result, both the fair value changes of these derivatives and the portion of the hedged items\u2019 fair value change that is attributable to the hedged interest rate risk are recognised in profit or loss, where they offset to the extent the hedge is effective.
The Company has applied the relief introduced by the amendments made to IFRS\u00a09 in September\u00a02019 on hedge accounting, having the effect that the IBOR reform should not cause hedge accounting to\u00a0terminate.
The Company invests in financial instruments such as overnight deposits, certificates of deposits, commercial papers, other money market instruments and short-term as well as medium-term bonds. For its financial instruments portfolio, the Company has an Asset Liability Management Committee in place that meets regularly and aims to limit the interest rate risk on a fair value basis through a value-at-risk approach, from which results a hedge ratio that is however not actively steered.
Commodity price risk \u2014 The Company is exposed to risk relating to fluctuations in the prices of commodities used in the supply chain. It manages these risks in the procurement process and to a certain extent uses derivative instruments in order to mitigate the risks associated with the purchase of raw materials. To the extent that the gains or losses of the derivative and those of the hedged item or transaction do not match in terms of profit or loss, the Company applies cash flow hedge accounting to the derivative instruments, with a hedge ratio of 1:1.
Equity price risk \u2014 The Company is to a small extent invested in equity securities mainly for operational reasons. Its exposure to equity price risk is hence limited. Furthermore, it is exposed under its LTIP to the risk of the Company share price increases. The Company limits these risks through the use of equity derivatives that qualify for hedge accounting and have been designated as hedging instruments in cash flow hedges, with a hedge ratio of 1:1.
Sensitivities of market risks \u2014 The approach used to measure and control market risk exposure of the Company\u2019s financial instrument portfolio is, amongst other key indicators, the value-at-risk model (\u201cVaR\u201d). The VaR of a portfolio is the estimated potential loss that will not be exceeded over a specified period of time (holding period) from an adverse market movement with a specified confidence level. The VaR used by the Company is based upon a 95% confidence level and assumes a five-day holding period. The VaR model used is mainly based on the so-called \u201cMonte-Carlo-Simulation\u201d method. The model generates a wide range of potential future scenarios for market price movements by deriving the relevant statistical behaviour of markets for the portfolio of market data from the previous two years and observed interdependencies between different markets and prices.
The Company\u2019s VaR computation includes the Company\u2019s financial debt, short-term and long-term investments, foreign currency forwards, swaps and options, commodity contracts, finance lease receivables and liabilities, foreign currency trade liabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations, including the following:
The Company uses VaR amongst other key figures in order to determine the riskiness of its financial instrument portfolio and in order to optimise the risk-return ratio of its financial asset portfolio. Further, its investment policy defines a VaR limit for the total portfolio of cash, cash equivalents and securities. The total VaR as well as the different risk-factor specific VaR figures of this portfolio are measured and serve amongst other measures as a basis for the decisions of the Company\u2019s Asset Liability Management Committee.
A summary of the VaR position of the Company financial instruments portfolio at 31\u00a0December 2022 and 2021 is as follows:
(In \u20ac million) | Total VaR | Equity\u00a0 | Currency\u00a0 | Commodity price VaR | Interest\u00a0 |
|---|---|---|---|---|---|
31\u00a0December 2022 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 1,450 | 0 | 1,535 | 0 | 238 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 268 | 67 | 225 | 0 | 80 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 130 | 0 | 83 | 0 | 112 |
Commodity contracts | 2 | 0 | 0 | 2 | 0 |
Equity swaps | 2 | 2 | 0 | 0 | 0 |
Diversification effect | (584) | (1) | (472) | 0 | (139) |
All financial instruments | 1,268 | 68 | 1,371 | 2 | 291 |
31\u00a0December 2021 | |||||
Foreign exchange hedges for forecast transactions or firm commitments | 910 | 0 | 945 | 0 | 173 |
Financing liabilities, financial assets (including cash, cash equivalents, securities and related hedges) | 127 | 58 | 68 | 0 | 110 |
Finance lease receivables and liabilities, foreign currency trade payables and receivables | 52 | 0 | 39 | 0 | 39 |
Commodity contracts | 3 | 0 | 0 | 3 | 0 |
Equity swaps | 5 | 0 | 0 | 0 | 0 |
Diversification effect | (162) | 2 | (125) | 0 | (169) |
All financial instruments | 935 | 60 | 927 | 3 | 153 |
As of 31\u00a0December 2022, the total VaR amounts to \u20ac\u20091,268\u00a0million (2021: \u20ac\u2009935\u00a0million). The increase is mainly attributable to the currency and interest rate volatilities.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging instruments are \u2013 depending on the hedges\u2019 actual effectiveness \u2013 offset by corresponding opposite market risks of the underlying forecast transactions, assets or liabilities. Under IFRS\u00a07, the underlying forecast transactions do not qualify as financial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in the amount of \u20ac\u20091,535\u00a0million (2021: \u20ac\u2009945\u00a0million) cannot be considered as a risk indicator for the Company in the economic sense.", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-71": { "value": "The Company\u2019s policy is to maintain sufficient cash and cash equivalents at any time to meet its present and future commitments as they fall due. It manages its liquidity by holding adequate volumes of liquid assets and maintains a committed revolving credit facility,\u00a0in addition to the cash inflow generated by its operating business. The Company continues to keep the focus on low counterparty risk within its asset portfolio. In addition, it maintains a set of other funding sources, and accordingly may raise loans from commercial banks and Development Finance Institutions and issue bonds, notes and commercial papers or enter into security lending agreements. Adverse changes in the capital markets could increase its funding costs and limit its financial flexibility.
In particular, Airbus signed on 5\u00a0July 2022 a \u20ac\u20098\u00a0billion Sustainability Linked Revolving Syndicated Credit Facility in order to refinance its \u20ac\u20096\u00a0billion existing facility signed in 2020.
Management considers the Company has sufficient resources to continue operating for at least 12\u00a0months and that there are no material uncertainties about the Company\u2019s ability to continue as a going concern.
Further, the management of the vast majority of the Company\u2019s liquidity exposure is centralised by a daily cash concentration process. This process enables it to manage its liquidity surplus as well as its liquidity requirements according to the actual needs of its subsidiaries. In addition, management monitors the Company\u2019s liquidity reserve as well as the expected cash flows from its operations.
The contractual maturities of the Company\u2019s financial liabilities, based on undiscounted cash flows and including interest payments, if applicable, are as follows:
(In \u20ac million) | Carrying amount | Contractual cash flows | < 1 year | 1 year - | 2 years - | 3 years - | 4 years - | > 5 years |
|---|---|---|---|---|---|---|---|---|
31\u00a0December 2022 | ||||||||
Non-derivative financial liabilities | (26,753) | (29,230) | (15,885) | (1,791) | (936) | (1,760) | (1,192) | (7,666) |
Derivative financial liabilities | (9,613) | (10,861) | (3,538) | (2,647) | (1,610) | (1,118) | (537) | (1,411) |
Total | (36,366) | (40,091) | (19,423) | (4,438) | (2,546) | (2,878) | (1,729) | (9,077) |
31\u00a0December 2021 | ||||||||
Non-derivative financial liabilities | (25,387) | (27,962) | (12,072) | (1,000) | (1,539) | (1,095) | (2,381) | (9,875) |
Derivative financial liabilities | (4,563) | (6,193) | (1,887) | (1,661) | (1,245) | (728) | (440) | (232) |
Total | (29,950) | (34,155) | (13,959) | (2,661) | (2,784) | (1,823) | (2,821) | (10,107) |
Non-derivative financial liabilities included in the table above comprise financing liabilities as presented in \u201c\u2013 Note\u00a038.2: Carrying Amounts and Fair Values of Financial Instruments\u201d. Due to their specific nature, namely their risk-sharing features and uncertainty about the repayment dates, the European Governments\u2019 refundable advances, which amount to \u20ac -3,857\u00a0million at 31\u00a0December 2022 (\u20ac\u2009-3,861\u00a0million at 31\u00a0December 2021) are not included.
The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is as follows:
(In \u20ac million) | 31 December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | (241) | (245) |
Later than one year and not later than five years | (747) | (758) |
Later than five years | (1,036) | (1,043) |
Total undiscounted lease liabilities | (2,024) | (2,046) |
Lease liabilities included in the statement of financial position | (1,734) | (1,736) |
Current | (242) | (245) |
Non-current | (1,492) | (1,491) |
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | ||
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,474 | 1,166 | 0 | 0 | 2,640 | 2,640 |
Customer financing | 86 | 0 | 0 | 0 | 86 | 86 |
Other loans\u00a0(2) | 0 | 0 | 2,129 | 2,129 | 2,129 | 2,129 |
Trade receivables | 0 | 0 | 4,953 | 4,953 | 4,953 | 4,953 |
Contract assets | 0 | 0 | 1,527 | 1,527 | 1,527 | 1,527 |
Other financial assets | ||||||
Derivative instruments | 1,894 | 0 | 0 | 0 | 1,894 | 1,894 |
Non-derivative instruments | 0 | 0 | 1,429 | 1,429 | 1,429 | 1,429 |
Securities | 0 | 7,775 | 0 | 0 | 7,775 | 7,775 |
Cash and cash equivalents | 11,135 | 1,001 | 3,687 | 3,687 | 15,823 | 15,823 |
Total | 14,589 | 9,942 | 13,725 | 13,725 | 38,256 | 38,256 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (8,681) | (9,071) | (8,681) | (9,071) |
Liabilities to financial institutions and others | 0 | 0 | (2,358) | (2,358) | (2,358) | (2,358) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,734) | (1,734) | (1,734) | (1,734) |
Other financial liabilities | ||||||
Derivative instruments | (9,613) | 0 | 0 | 0 | (9,613) | (9,613) |
European Governments\u2019 refundable advances\u00a0(3) | 0 | 0 | (3,857) | (3,857) | (3,857) | (3,857) |
Others | 0 | (83) | (636) | (636) | (719) | (719) |
Trade liabilities | 0 | 0 | (13,261) | (13,261) | (13,261) | (13,261) |
Total | (9,613) | (83) | (30,527) | (30,917) | (40,223) | (40,613) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) The European Governments\u2019 refundable advances of \u20ac\u2009-3,857\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2021:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | Financial instruments total | |
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,033 | 1,478 | 0 | 0 | 2,511 | 2,511 |
Customer financing | 118 | 0 | 0 | 0 | 118 | 118 |
Other loans\u00a0(2) | 0 | 0 | 1,909 | 1,909 | 1,909 | 1,909 |
Trade receivables\u00a0(3) | 0 | 0 | 4,957 | 4,957 | 4,957 | 4,957 |
Contract assets | 0 | 0 | 1,404 | 1,404 | 1,404 | 1,404 |
Other financial assets | ||||||
Derivative instruments | 1,005 | 0 | 0 | 0 | 1,005 | 1,005 |
Non-derivative instruments | 0 | 0 | 1,137 | 1,137 | 1,137 | 1,137 |
Securities | 0 | 8,111 | 0 | 0 | 8,111 | 8,111 |
Cash and cash equivalents | 12,075 | 533 | 1,964 | 1,964 | 14,572 | 14,572 |
Total | 14,231 | 10,122 | 11,371 | 11,371 | 35,724 | 35,724 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (11,061) | (11,886) | (11,061) | (11,886) |
Liabilities to financial institutions and others | 0 | 0 | (2,243) | (2,243) | (2,243) | (2,243) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,736) | (1,736) | (1,736) | (1,736) |
Other financial liabilities | ||||||
Derivative instruments | (4,563) | 0 | 0 | 0 | (4,563) | (4,563) |
European Governments\u2019 refundable advances\u00a0(4) | 0 | 0 | (3,861) | (3,861) | (3,861) | (3,861) |
Others | 0 | (16) | (654) | (654) | (670) | (670) |
Trade liabilities | 0 | 0 | (9,693) | (9,693) | (9,693) | (9,693) |
Total | (4,563) | (16) | (29,248) | (30,073) | (33,827) | (34,652) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) 2021 figures restated in accordance with 2022 presentation. (4) The European Governments\u2019 refundable advances of \u20ac\u2009-3,861\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The following table presents the carrying amounts of the financial instruments held for the three levels of the fair value hierarchy as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | Level 1 | Level 2 | Level 3 | Total | |
Financial assets measured at fair value | ||||||||
\u00a0Equity Investments | 1,896 | 0 | 744 | 2,640 | 1,808 | 0 | 703 | 2,511 |
\u00a0Derivative instruments | 0 | 1,894 | 0 | 1,894 | 0 | 1,005 | 0 | 1,005 |
\u00a0Securities | 7,775 | 0 | 0 | 7,775 | 8,111 | 0 | 0 | 8,111 |
\u00a0Customer financing | 0 | 0 | 86 | 86 | 0 | 0 | 118 | 118 |
\u00a0Cash equivalents | 11,135 | 1,001 | 0 | 12,136 | 12,075 | 533 | 0 | 12,608 |
Total | 20,806 | 2,895 | 830 | 24,531 | 21,994 | 1,538 | 821 | 24,353 |
Financial liabilities measured at fair value | ||||||||
\u00a0Derivative instruments | 0 | (9,529) | (84) | (9,613) | 0 | (4,485) | (78) | (4,563) |
\u00a0Other financial liabilities | 0 | 0 | (83) | (83) | 0 | 0 | (16) | (16) |
Total | 0 | (9,529) | (167) | (9,696) | 0 | (4,485) | (94) | (4,579) |
The development of financial instruments of Level\u00a03 is as follows:
(In \u20ac million) | Derivatives | Participations | Customer financing | Total | Written put options on NCI interests | Commodity swap agreements | Total |
|---|---|---|---|---|---|---|---|
Balance at 1\u00a0January 2021 | 0 | 465 | 237 | 702 | 0 | (12) | (12) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (119) | (119) | 0 | (95) | (95) |
Equity | 0 | 238 | 0 | 238 | (16) | 0 | (16) |
Settlements | 0 | 0 | 0 | 0 | 0 | 29 | 29 |
Release | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2021 | 0 | 703 | 118 | 821 | (16) | (78) | (94) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (32) | (32) | 0 | (98) | (98) |
Equity | 0 | 41 | 0 | 41 | (67) | 0 | (67) |
Settlements | 0 | 0 | 0 | 0 | 0 | 92 | 92 |
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2022 | 0 | 744 | 86 | 830 | (83) | (84) | (167) |
As at 31\u00a0December 2022, the fair value of the written put options on non-controlling interests (\u201cNCI puts\u201d) relating to ACLP amounts to \u20ac\u200983\u00a0million (2021: \u20ac\u200916\u00a0million) and includes a funding of ACLP by IQ in 2022.
The fair value of these NCI puts is derived from a discounted cash flow analysis using the latest operating plan and a projection over the lifetime of the A220 programme. In addition, a post-tax WACC of 9.74% is used to discount the forecasted cash flows, taking into account the specificities of the programme (2021: 9.58%).The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
Financial instruments \u2014 The Company\u2019s financial assets mainly consist of cash, short to medium-term deposits and securities. Its financial liabilities include trade liabilities, obligations towards financial institutions, issued bonds and refundable advances from European Governments. All purchases and sales of financial assets are recognised on the settlement date according to market conventions.
Financial assets at amortised cost \u2014 This category comprises assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. It includes trade receivables.
Financial assets at fair value through OCI \u2014 This category comprises:
Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).
The Company assigns its financial instruments into classes based on their balance sheet category.
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2022:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | ||
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,474 | 1,166 | 0 | 0 | 2,640 | 2,640 |
Customer financing | 86 | 0 | 0 | 0 | 86 | 86 |
Other loans\u00a0(2) | 0 | 0 | 2,129 | 2,129 | 2,129 | 2,129 |
Trade receivables | 0 | 0 | 4,953 | 4,953 | 4,953 | 4,953 |
Contract assets | 0 | 0 | 1,527 | 1,527 | 1,527 | 1,527 |
Other financial assets | ||||||
Derivative instruments | 1,894 | 0 | 0 | 0 | 1,894 | 1,894 |
Non-derivative instruments | 0 | 0 | 1,429 | 1,429 | 1,429 | 1,429 |
Securities | 0 | 7,775 | 0 | 0 | 7,775 | 7,775 |
Cash and cash equivalents | 11,135 | 1,001 | 3,687 | 3,687 | 15,823 | 15,823 |
Total | 14,589 | 9,942 | 13,725 | 13,725 | 38,256 | 38,256 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (8,681) | (9,071) | (8,681) | (9,071) |
Liabilities to financial institutions and others | 0 | 0 | (2,358) | (2,358) | (2,358) | (2,358) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,734) | (1,734) | (1,734) | (1,734) |
Other financial liabilities | ||||||
Derivative instruments | (9,613) | 0 | 0 | 0 | (9,613) | (9,613) |
European Governments\u2019 refundable advances\u00a0(3) | 0 | 0 | (3,857) | (3,857) | (3,857) | (3,857) |
Others | 0 | (83) | (636) | (636) | (719) | (719) |
Trade liabilities | 0 | 0 | (13,261) | (13,261) | (13,261) | (13,261) |
Total | (9,613) | (83) | (30,527) | (30,917) | (40,223) | (40,613) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) The European Governments\u2019 refundable advances of \u20ac\u2009-3,857\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2021:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | Financial instruments total | |
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,033 | 1,478 | 0 | 0 | 2,511 | 2,511 |
Customer financing | 118 | 0 | 0 | 0 | 118 | 118 |
Other loans\u00a0(2) | 0 | 0 | 1,909 | 1,909 | 1,909 | 1,909 |
Trade receivables\u00a0(3) | 0 | 0 | 4,957 | 4,957 | 4,957 | 4,957 |
Contract assets | 0 | 0 | 1,404 | 1,404 | 1,404 | 1,404 |
Other financial assets | ||||||
Derivative instruments | 1,005 | 0 | 0 | 0 | 1,005 | 1,005 |
Non-derivative instruments | 0 | 0 | 1,137 | 1,137 | 1,137 | 1,137 |
Securities | 0 | 8,111 | 0 | 0 | 8,111 | 8,111 |
Cash and cash equivalents | 12,075 | 533 | 1,964 | 1,964 | 14,572 | 14,572 |
Total | 14,231 | 10,122 | 11,371 | 11,371 | 35,724 | 35,724 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (11,061) | (11,886) | (11,061) | (11,886) |
Liabilities to financial institutions and others | 0 | 0 | (2,243) | (2,243) | (2,243) | (2,243) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,736) | (1,736) | (1,736) | (1,736) |
Other financial liabilities | ||||||
Derivative instruments | (4,563) | 0 | 0 | 0 | (4,563) | (4,563) |
European Governments\u2019 refundable advances\u00a0(4) | 0 | 0 | (3,861) | (3,861) | (3,861) | (3,861) |
Others | 0 | (16) | (654) | (654) | (670) | (670) |
Trade liabilities | 0 | 0 | (9,693) | (9,693) | (9,693) | (9,693) |
Total | (4,563) | (16) | (29,248) | (30,073) | (33,827) | (34,652) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) 2021 figures restated in accordance with 2022 presentation. (4) The European Governments\u2019 refundable advances of \u20ac\u2009-3,861\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The fair values disclosed for financial instruments accounted for at amortised cost reflect Level\u00a02 input. Otherwise, the Company determines mostly fair values based on Level\u00a01 and Level\u00a02 inputs and to a lesser extent on Level\u00a03 input.
The following table presents the carrying amounts of the financial instruments held for the three levels of the fair value hierarchy as of 31\u00a0December 2022 and 2021, respectively:
(In \u20ac million) | 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | Level 1 | Level 2 | Level 3 | Total | |
Financial assets measured at fair value | ||||||||
\u00a0Equity Investments | 1,896 | 0 | 744 | 2,640 | 1,808 | 0 | 703 | 2,511 |
\u00a0Derivative instruments | 0 | 1,894 | 0 | 1,894 | 0 | 1,005 | 0 | 1,005 |
\u00a0Securities | 7,775 | 0 | 0 | 7,775 | 8,111 | 0 | 0 | 8,111 |
\u00a0Customer financing | 0 | 0 | 86 | 86 | 0 | 0 | 118 | 118 |
\u00a0Cash equivalents | 11,135 | 1,001 | 0 | 12,136 | 12,075 | 533 | 0 | 12,608 |
Total | 20,806 | 2,895 | 830 | 24,531 | 21,994 | 1,538 | 821 | 24,353 |
Financial liabilities measured at fair value | ||||||||
\u00a0Derivative instruments | 0 | (9,529) | (84) | (9,613) | 0 | (4,485) | (78) | (4,563) |
\u00a0Other financial liabilities | 0 | 0 | (83) | (83) | 0 | 0 | (16) | (16) |
Total | 0 | (9,529) | (167) | (9,696) | 0 | (4,485) | (94) | (4,579) |
The development of financial instruments of Level\u00a03 is as follows:
(In \u20ac million) | Derivatives | Participations | Customer financing | Total | Written put options on NCI interests | Commodity swap agreements | Total |
|---|---|---|---|---|---|---|---|
Balance at 1\u00a0January 2021 | 0 | 465 | 237 | 702 | 0 | (12) | (12) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (119) | (119) | 0 | (95) | (95) |
Equity | 0 | 238 | 0 | 238 | (16) | 0 | (16) |
Settlements | 0 | 0 | 0 | 0 | 0 | 29 | 29 |
Release | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2021 | 0 | 703 | 118 | 821 | (16) | (78) | (94) |
Business combination | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Profit or loss | 0 | 0 | (32) | (32) | 0 | (98) | (98) |
Equity | 0 | 41 | 0 | 41 | (67) | 0 | (67) |
Settlements | 0 | 0 | 0 | 0 | 0 | 92 | 92 |
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance at 31\u00a0December 2022 | 0 | 744 | 86 | 830 | (83) | (84) | (167) |
As at 31\u00a0December 2022, the fair value of the written put options on non-controlling interests (\u201cNCI puts\u201d) relating to ACLP amounts to \u20ac\u200983\u00a0million (2021: \u20ac\u200916\u00a0million) and includes a funding of ACLP by IQ in 2022.
The fair value of these NCI puts is derived from a discounted cash flow analysis using the latest operating plan and a projection over the lifetime of the A220 programme. In addition, a post-tax WACC of 9.74% is used to discount the forecasted cash flows, taking into account the specificities of the programme (2021: 9.58%).
The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | ||
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,474 | 1,166 | 0 | 0 | 2,640 | 2,640 |
Customer financing | 86 | 0 | 0 | 0 | 86 | 86 |
Other loans\u00a0(2) | 0 | 0 | 2,129 | 2,129 | 2,129 | 2,129 |
Trade receivables | 0 | 0 | 4,953 | 4,953 | 4,953 | 4,953 |
Contract assets | 0 | 0 | 1,527 | 1,527 | 1,527 | 1,527 |
Other financial assets | ||||||
Derivative instruments | 1,894 | 0 | 0 | 0 | 1,894 | 1,894 |
Non-derivative instruments | 0 | 0 | 1,429 | 1,429 | 1,429 | 1,429 |
Securities | 0 | 7,775 | 0 | 0 | 7,775 | 7,775 |
Cash and cash equivalents | 11,135 | 1,001 | 3,687 | 3,687 | 15,823 | 15,823 |
Total | 14,589 | 9,942 | 13,725 | 13,725 | 38,256 | 38,256 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (8,681) | (9,071) | (8,681) | (9,071) |
Liabilities to financial institutions and others | 0 | 0 | (2,358) | (2,358) | (2,358) | (2,358) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,734) | (1,734) | (1,734) | (1,734) |
Other financial liabilities | ||||||
Derivative instruments | (9,613) | 0 | 0 | 0 | (9,613) | (9,613) |
European Governments\u2019 refundable advances\u00a0(3) | 0 | 0 | (3,857) | (3,857) | (3,857) | (3,857) |
Others | 0 | (83) | (636) | (636) | (719) | (719) |
Trade liabilities | 0 | 0 | (13,261) | (13,261) | (13,261) | (13,261) |
Total | (9,613) | (83) | (30,527) | (30,917) | (40,223) | (40,613) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) The European Governments\u2019 refundable advances of \u20ac\u2009-3,857\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
The following table presents the carrying amounts and fair values of financial instruments by class and by IFRS\u00a09 measurement category as of 31\u00a0December 2021:
(In \u20ac million) | Fair value through profit or loss | Fair value through OCI | Financial assets and liabilities at amortised cost | Financial instruments total | Financial instruments total | |
|---|---|---|---|---|---|---|
Amortised cost | Fair value | Book value | Fair value | |||
Assets | ||||||
Other investments and other long-term financial assets | ||||||
Equity investments\u00a0(1) | 1,033 | 1,478 | 0 | 0 | 2,511 | 2,511 |
Customer financing | 118 | 0 | 0 | 0 | 118 | 118 |
Other loans\u00a0(2) | 0 | 0 | 1,909 | 1,909 | 1,909 | 1,909 |
Trade receivables\u00a0(3) | 0 | 0 | 4,957 | 4,957 | 4,957 | 4,957 |
Contract assets | 0 | 0 | 1,404 | 1,404 | 1,404 | 1,404 |
Other financial assets | ||||||
Derivative instruments | 1,005 | 0 | 0 | 0 | 1,005 | 1,005 |
Non-derivative instruments | 0 | 0 | 1,137 | 1,137 | 1,137 | 1,137 |
Securities | 0 | 8,111 | 0 | 0 | 8,111 | 8,111 |
Cash and cash equivalents | 12,075 | 533 | 1,964 | 1,964 | 14,572 | 14,572 |
Total | 14,231 | 10,122 | 11,371 | 11,371 | 35,724 | 35,724 |
Liabilities | ||||||
Financing liabilities | ||||||
Bonds and commercial papers | 0 | 0 | (11,061) | (11,886) | (11,061) | (11,886) |
Liabilities to financial institutions and others | 0 | 0 | (2,243) | (2,243) | (2,243) | (2,243) |
Finance lease liabilities\u00a0(2) | 0 | 0 | (1,736) | (1,736) | (1,736) | (1,736) |
Other financial liabilities | ||||||
Derivative instruments | (4,563) | 0 | 0 | 0 | (4,563) | (4,563) |
European Governments\u2019 refundable advances\u00a0(4) | 0 | 0 | (3,861) | (3,861) | (3,861) | (3,861) |
Others | 0 | (16) | (654) | (654) | (670) | (670) |
Trade liabilities | 0 | 0 | (9,693) | (9,693) | (9,693) | (9,693) |
Total | (4,563) | (16) | (29,248) | (30,073) | (33,827) | (34,652) |
(1) Other than those accounted for under the equity method. (2) The carrying amounts are used as reasonable\u00a0fair value approximations. (3) 2021 figures restated in accordance with 2022 presentation. (4) The European Governments\u2019 refundable advances of \u20ac\u2009-3,861\u00a0million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing nature and the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production. |
Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.
The Company\u2019s net gains or net losses recognised in profit or loss in 2022 and 2021, respectively, are as follows:
(In \u20ac million) | 2022 | 2021 |
|---|---|---|
Financial assets or financial liabilities at fair value through profit or loss | ||
Held for trading | 497 | 404 |
Designated on initial recognition | 95 | 188 |
Financial assets at amortised cost | (232) | 283 |
Financial assets at fair value through OCI (previously available-for-sale) | 55 | 20 |
Financial liabilities measured at amortised cost | (75) | (700) |
Net losses of \u20ac\u2009-1,169\u00a0million (2021: \u20ac\u2009-218\u00a0million) are recognised directly in equity relating to financial assets at fair value.
Interest income from financial assets or financial liabilities through profit or loss is included in net gains or losses.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-74": { "value": "Financial assets at fair value through profit or loss \u2014 This category comprises all other financial assets (e.g. derivative instruments) that are to be measured at fair value (including equity investments for which the Company did not elect to present changes in fair value in OCI).The Company assigns its financial instruments into classes based on their balance sheet category.Fair value of financial instruments \u2014 The fair value of quoted investments is based on current market prices. If the market for financial assets is not active, or in the case of unlisted financial instruments, the Company determines fair values by using generally accepted valuation techniques on the basis of market information available at the end of the reporting period. Derivative instruments are generally managed on the basis of the Company\u2019s net exposure to the credit risk of each particular counterparty and fair value information is provided to the Company\u2019s key management personnel on that basis. For these derivative instruments, the fair value is measured based on the price that would be received to sell a net long position, or transfer a net short position, for a particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values rely on observable market data, fair value measurements may be hierarchised according to the following levels of input:
The following types of financial assets held at 31\u00a0December 2022 and 2021, respectively, are designated at fair value through profit or loss:
(In \u20ac million) | Nominal amount\u00a0 | Fair value at 31\u00a0December 2022 | Nominal amount at initial recognition at | Fair value at |
|---|---|---|---|---|
Designated at fair value through profit or loss\u00a0 | ||||
Money market funds | 11,135 | 11,135 | 12,075 | 12,075 |
Foreign currency funds of fixed income funds | 0 | 0 | 2 | 2 |
Total | 11,135 | 11,135 | 12,077 | 12,077 |
The Company manages these assets and measures their performance on a fair value basis.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f15778": { "value": "
The Company uses the following methods to measure fair values:
Equity instruments \u2014 The fair values of listed equity instruments reflect quoted market prices. For non-listed equity investments for which quoted market prices are not available, the Company determines the fair values using valuation methods such as net asset values, discounted cash flow method or a comparable valuation technique.
Customer financing assets and other loans \u2014 The carrying amounts reflected in the annual accounts are used as a proxy for fair value.
Contract assets, trade receivables and other receivables \u2014 The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the receivables\u2019 origination and their maturity.
Securities \u2014 The fair values of securities reflect their quoted market price at the end of the reporting period.
Cash and cash equivalents \u2014 include cash in hand, cash in banks, checks, fixed deposits as well as commercial papers and money market funds. The carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of the instrument and its maturity or due date. The fair value of commercial papers is determined based on Level\u00a02 input by discounting future cash flows using appropriate interest rates. The fair values of money market funds are determined by reference to their quoted market price.
Derivatives \u2014 The fair values of derivative instruments reflect quoted market prices, where available, but in most cases are determined using recognised valuation techniques such as option-pricing models (e.g. Black & Scholes model) and discounted cash flow models. The valuation is based on observable market data such as currency rates, currency forward rates, interest rates and yield curves, commodity forward prices as well as price and rate volatilities obtained from recognised vendors of market data. Furthermore, to the extent that these instruments are subject to master netting arrangements and similar agreements and managed on the basis of net credit exposure, their fair values reflect credit and debit value adjustments based on the net long or net short position that the Company has with each counterparty. Except for certain short-term commodity contracts and derivatives presented in the Level\u00a03 section above, derivative fair values are measured based on Level\u00a02 input.
Financing liabilities \u2014 The fair values disclosed for financing liabilities, other than those of issued bonds and commercial papers, are determined based on Level\u00a02 input by discounting scheduled or expected cash flows using appropriate market interest rates. The fair values disclosed for the issued EMTN and US dollar bonds reflect public price quotations that qualify as Level\u00a01 input. For issued commercial papers, the carrying amounts reflected in the annual accounts are used as reasonable estimates of fair value because of the relatively short period between the origination of these instruments and their maturity.
Trade liabilities and current other financial liabilities \u2014 For the same reason as trade receivables, carrying amounts are used as reasonable fair value approximations for trade liabilities and current other financial liabilities.
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments as of 31\u00a0December 2022 and 2021:
31 December | ||||||
|---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
(Rate in %) | \u20ac | US$ | \u00a3 | |||
6\u00a0months | 2.39 | (0.49) | 4.75 | 0.29 | 4.03 | 0.52 |
1\u00a0year | 2.80 | (0.48) | 4.79 | 0.53 | 4.30 | 0.80 |
5\u00a0years | 2.62 | 0.01 | 3.66 | 1.35 | 3.81 | 1.13 |
10\u00a0years | 2.58 | 0.30 | 3.47 | 1.56 | 3.44 | 1.07 |
With reference to Section\u00a02:382a (1) and (2) of the Netherlands Civil Code, the following fees for the financial year 2022 have been charged by EY to the Company, its subsidiaries and other consolidated entities:
(In \u20ac thousand) | 2022 | 2021 |
|---|---|---|
Audit of the Financial Statements | 11,975 | 10,265 |
Other audit engagements | 485 | 284 |
Tax services | 316 | 497 |
Other non-audit services | 793 | 257 |
Total | 13,569 | 11,303 |
Other audit firms have audit fees related to audit process, certification and examination of individual and consolidated accounts of \u20ac\u20097\u00a0million in 2022 (2021: \u20ac\u20095\u00a0million).", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:MINO79WLOO247M1IL051", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-BFlmUy-78": { "value": "