Airbus 2015 Annual Report Download - page 49

AIRBUS GROUP REGISTRATION DOCUMENT 2015 l 17 l
Risk Factors
Registration Document 2015
2 Business-Related Risks
Acquisitions, Divestments, Joint Ventures & Strategic Alliances
As part of its business strategy, the Company may acquire or
divest businesses and form joint ventures or strategic alliances.
Acquisitions and divestments are inherently risky because
of difficulties that may arise when integrating or carving out
people, operations, technologies and products. There can be
no assurance that any of the businesses that the Company
acquires can be integrated or carved out successfully and as
timely as originally planned or that they will perform well and
deliver the expected synergies once integrated or separated.
In addition, the Company may incur significant acquisition or
divestment, administrative and other costs in connection with
these transactions, including costs related to integration or
separation of acquired businesses. While the Company believes
that it has established appropriate and adequate procedures
and processes to mitigate these risks, there is no assurance
that these transactions will be successful.
Public-Private Partnerships and Private Finance Initiatives
Defence customers, particularly in the UK, increasingly request
proposals and grant contracts under schemes known as public-
private partnerships (“PPPs”) or private finance initiatives
(“PFIs”). PPPs and PFIs differ substantially from traditional
defence equipment sales, as they often incorporate elements
such as:
 the provision of extensive operational services over the life
of the equipment;
 continued ownership and financing of the equipment by a party
other than the customer, such as the equipment provider;
 mandatory compliance with specific customer requirements
pertaining to public accounting or government procurement
regulations; and
 provisions allowing for the service provider to seek additional
customers for unused capacity.
The Company is party to PPP and PFI contracts, for example
through Paradigm with Skynet5 and related telecommunications
services, and in the AirTanker (FSTA) project. One of the
complexities presented by PFIs lies in the allocation of risks
and the timing thereof among different parties over the lifetime
of the project.
There can be no assurances of the extent to which the Company
will efficiently and effectively (i)compete for future PFI or PPP
programmes, (ii)administer the services contemplated under
the contracts, (iii)finance the acquisition of the equipment and
the on-going provision of services related thereto, or (iv)access
the markets for the commercialisation of excess capacity. The
Company may also encounter unexpected political, budgetary,
regulatory or competitive risks over the long duration of PPP
and PFI programmes.
Restructuring, Transformation and Cost Saving Programmes
In order to improve competitiveness, offset rising procurement
costs and achieve profitability targets, among other things,
the Company and its Divisions have launched several
restructuring, transformation, cost saving and competitiveness
programmes over the past several years. These include
group-wide programmes, as well as Division- or Corporate-
specific programmes such as the Airbus Defence andSpace
restructuring plan.
Anticipated cost savings under these programmes are based
on estimates, however, and actual savings under these
programmes may vary significantly. In particular, the Company’s
cost reduction measures are based on current conditions and
do not take into account any future cost increases that could
result from changes in its industry or operations, including new
business developments, wage and cost increases or other
factors. The Company’s failure to successfully implement these
planned cost reduction measures, or the possibility that these
efforts may not generate the level of cost savings it expects
going forward, could negatively affect its future results of
operation and financial condition.
In addition to the risk of not achieving the anticipated level of cost
savings from these programmes, the Company may also incur
higher than expected implementation costs. In many instances,
there may be internal resistance to the various organisational
restructuring and cost reduction measures contemplated.
Restructuring, closures, site divestitures and job reductions
may also harm the Company’s labour relations and public
relations, and have led and could lead to work stoppages
and/ or demonstrations. In the event that these work stoppages
and/or demonstrations become prolonged, or the costs of
implementing the programmes above are otherwise higher
than anticipated, the Company’s future results of operation
and financial condition may be negatively affected.
Financial Statements 2015
11 22 33 44 55
QRegistration Document 2015
Annual Report 2015 Financial Statements 2015
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