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EADS Annual Review 2010
Flight into
the Future

Table of contents

  • Page 1
    EADS Annual Review 2010 Flight into the Future

  • Page 2
    EADS at a glance

  • Page 3
    Contents III VI X XII EADS Group Airbus Eurocopter Astrium XIV Cassidian XVI Other Businesses XVII Global Sales XVIII EADS Shares XX EADS Management Structure

  • Page 4
    ..., defence and related services. In 2010, the Group's 10th anniversary year, EADS comprising Airbus, Eurocopter, Astrium and Cassidian generated revenues of â,¬ 45.8 billion and employed a workforce of some 122,000. III EADS Group Revenues Self-financed R&D EBIT* Net income 1) Earnings per share...

  • Page 5
    ...5,810 15,064 Variation +6% +15% -30% -26% -3% Airbus Division comprises Airbus Commercial and Airbus Military. Airbus' consolidated revenues of â,¬ 29,978 million show an increase of 7% compared to the same period last year. In number of aircraft Deliveries Order book 2010 510 3,552 2009 498 3,488...

  • Page 6
    ... in Lead Systems Integrator border security contracts. The revenues of Other Businesses increased by 8% to â,¬ 1,182 million, driven predominantly by the ramp-up in Light Utility Helicopter deliveries at EADS North America. ATR delivered 52 of its turboprop aircraft to customers and received...

  • Page 7
    eaDS annual report 2010 at a glance VI Airbus Commercial Airbus Commercial is market leader in the sector for civil aircraft seating 100 or more passengers. It offers airlines a highly competitive range of advanced, fuel-efficient aircraft. A320 A330/A340 A350 XWB A320 Family Airbus' Family of...

  • Page 8
    ...airline's status as the launch customer for the world's newest freighter aircraft, the wide-body A330-200F, at the Farnborough International Air Show. 19 September airbus Family day recalls "40 Years of Innovation" Airbus marks 40 years of innovation by inviting 145,000 employees, their families and...

  • Page 9
    eaDS annual report 2010 at a glance VIII Airbus Military Airbus Military is responsible for the European heavy military transport A400M project and produces and sells special mission aircraft, derived from existing aircraft platforms. It is the global leader for light and medium-sized military ...

  • Page 10
    ... Airbus Military CN235 maritime patrol aircraft through EADS North America, the prime contractor for EADS military and defence products in the United States. The Coast Guard has an option to buy up to six more aircraft over four years. 6 October Military certification for a330 Mrtt Airbus Military...

  • Page 11
    ... on site (1,600 flight hours). EC135 The EC135 is a light twin-engine, multi-mission helicopter made using the latest carbon fibre technologies. Variations have been designed specifically for VIP transport, and for rescue and police work. The EC135 has become the helicopter of choice in the world of...

  • Page 12
    ... this fast-growing market, reinforcing its support and services network throughout the country, and further developing the company's four-decade relationship with Indian industry. 17 December nH90 ttH for France and Spain perform maiden flights France and Spain's NH90 Tactical Transport Helicopters...

  • Page 13
    eaDS annual report 2010 at a glance XII Astrium is the third largest space systems manufacturing company in the world and the leading supplier in Europe. It designs, develops and manufactures satellites, orbital infrastructures and launcher systems and provides space services. Ariane 5 Ariane 5...

  • Page 14
    ... satellites are based on the Eurostar Family platforms, of which 63 had been ordered up to the end of 2010. The latest version is Eurostar 3000. Astrium's telecommunications satellites are used for both civil and military applications. The year 2010 in review 9 March uK Ministry of Defence orders...

  • Page 15
    eaDS annual report 2010 at a glance XIV Cassidian is the main pole of EADS' defence and global security activities. Its wide range of products and services include the Eurofighter combat aircraft, missile systems, integrated defence and security solutions, defence electronics and related services....

  • Page 16
    ... is designed to be adapted and improved over the longterm, as new avionics and weapons evolve, to provide for an extended service life. The year 2010 in review 17 May cassidian commissioned to deliver Future Soldier System Germany's Federal Office of Defence Technology and Procurement orders...

  • Page 17
    ... North America EADS North America is the North American operation of EADS. Headquartered in Arlington, Virginia, the company offers a broad array of advanced solutions for fixed- and rotary-wing aircraft, homeland and cyber security, telecommunications, defence electronics and avionics, and services...

  • Page 18
    ... commercial and industrial opportunities. EADS is seeking to develop strategic partnerships with Brazil in space, defence and security domains. In 2010, Cassidian signed an agreement with Odebrecht in Brazil for a joint-venture in the field of defence and security technology. 1) Of Group revenues.

  • Page 19
    ... index. In a positive market environment, EADS benefited from a favourable dollar development, encouraging news on aircraft orders and the gradual derisking of the A400M and A380 programmes. Early in the year, EADS' share price benefited from a general market upturn. Following positive news on the...

  • Page 20
    ... a glance eaDS SHareS Share Price Evolution as of 31 December 2010 Base 100 as of 2 January 2008 2008 2009 EADS share price in â,¬ 2010 XIX 25 100 20 80 15 60 10 40 5 J F M A M J J A S O N D EADS CAC 40 MSCI World Aero/Defence (in â,¬, adjusted daily US$/â,¬ rate) 20 Shareholder Structure as...

  • Page 21
    eaDS annual report 2010 at a glance XX EADS Management Structure as of 1 April 2011 GROUP FUNCTIONS chief Financial officer Hans Peter Ring corporate Secretary Pierre de Bausset board of Directors Bodo Uebber (Chairman) Louis Gallois Rolf Bartke Dominique D'Hinnin Juan Manuel Eguiagaray Arnaud ...

  • Page 22
    ... Company offering through information exchange, technology sharing and working practice synergies. 1) Responsible as Executive Committee Member, of a permanent Group-wide mission to ensure EADS enhanced operational performance. 2) 100% EADS owned, management delegated to Airbus. 3) The organisation...

  • Page 23
    ... The Year in Review 38 Airbus 44 Eurocopter 46 Astrium 48 Cassidian 64 Glossary 66 Addresses 68 Shareholder Information THE BIG PICTURE 24 Interview with the Chief Strategy and Marketing Officer 26 Markets and Perspectives BUILDING THE FUTURE 54 Human Resources 56 Innovation 58 Programme Management...

  • Page 24
    eaDS annual reVIeW 2010 2 Built from vision our continuing su creating long-ter Our flight into the

  • Page 25
    ... Europe to celebrate our 10th anniversary represent our future. At EADS, we anticipate the products our clients will need 10 or 20 years from now. By doing so, we stay ahead of the game, make more possible for our customers and deliver products that are at the cutting edge. By thinking long-term...

  • Page 26
    longval

  • Page 27
    -term ue

  • Page 28
    ...am convinced that the high level of EADS technology and employee commitment will drive long-term value." - Louis Gallois Chief Executive Officer EADS is a world leader in the aerospace and defence industry and can count on the expertise and passionate commitment of some 122,000 employees around the...

  • Page 29

  • Page 30
    ... performance in 2010 was better than expected. When we closed our books, all key financial indicators were above management guidance, particularly cash flow and order intake. Initiatives launched to enhance programme management, reduce costs and create efficiencies have all begun to deliver results...

  • Page 31
    ... in place is geared towards achieving this objective. In summary, the Board played its part in EADS' recovery in 2010. We were pleased to note that the share price reflected this positive trend. Clearly, our positive results have raised the bar in terms of market expectations. We will do our utmost...

  • Page 32
    ... 2010 long-terM Value 10 The Board of Directors 01 02 03 07 08 01 02 03 BODO UEBBER (51) Chairman of the Board of Directors of EADS LOUIS GALLOIS (67) Chief Executive Officer of EADS HERMANN-JOSEF LAMBERTI (55) Member of the Management Board of Deutsche Bank AG Besides his position...

  • Page 33
    ...to his current positions, Sir John Parker held several management positions in the engineering, shipbuilding and defence industries, including some 25 years' experience as a Chief Executive Officer with Harland & Wolff and the Babcock International Group. 10 Prior to his current position, Mr Lagard...

  • Page 34
    ... in key business processes and employee engagement. General topics addressed by the Board included: EADS' strategy (including the competitive environment), the Group's financial results and forecasts, Enterprise Risk Management results and system, investor relations and financial communication...

  • Page 35
    ... reviewed proposed changes to the executives' remuneration structure and system from 2011 onwards. Executive Committee members' 2010 salaries, long-term incentive plan, variable pay for 2009 and succession planning were also discussed as well as a possible adaptation to the 2011 employee share...

  • Page 36
    eaDS annual reVIeW 2010 long-terM Value 14 Chief Executive Officer's Message Last year, EADS celebrated its 10th anniversary, concluding a decade in which it has matured into a world leader in aerospace and defence. In just ten years, EADS has emerged from a collection of medium-sized national ...

  • Page 37
    ... is vital for the success of our Vision 2020 strategy. We have a huge task ahead of us in better balancing our portfolio of activities and becoming less dependent on Airbus commercial aircraft cycles, developing, in particular, services, security, and defence outside Europe in a period of budget...

  • Page 38
    ...EADS' financial resources to support operational performance and prepare the Group's future. Mr Auque is responsible for the success of Astrium and coordinates between the Group's defence, security and space activities to foster synergies. JEAN BOTTI steers EADS' Research and Technology, Innovation...

  • Page 39
    long-terM Value tHe eXecutIVe coMMIttee 17 LOUIS GALLOIS is the Chief Executive Officer of EADS THOMAS ENDERS leads the Airbus Division MARWAN LAHOUD leads EADS' Strategy and Marketing activities Mr Gallois is responsible for the overall successful management of EADS Group business and ...

  • Page 40
    eaDS annual reVIeW 2010 long-terM Value 18 Interview with the Chief Financial Officer Hans Peter Ring Free cash flow at â,¬2.7 billion was significantly above the previous year's mark, based on active cash management and an improved financing environment. And, after a â,¬553 million contribution...

  • Page 41
    ... product portfolio - commercially and on the military side. We have to monitor the government budget situation. Based on our proven risk management processes, we are closely following geo-political developments in North Africa, the fuel price, and dollar evolution. Two of the three big programme...

  • Page 42
    the pict

  • Page 43
    big ure

  • Page 44
    ... Pilot, Eurocopter Eurocopter helicopters are currently in service in more than 140 countries and account for 33% of the worldwide civil and parapublic fleet. The EC225 is the latest member of the Super Puma Family, which are in operation in more than 20 countries. The military variant, EC725, has...

  • Page 45

  • Page 46
    eaDS annual reVIeW 2010 tHe bIg pIcture 24 Interview with the Chief Strategy and Marketing Officer Marwan Lahoud How would you summarise the year 2010 from the point of view of EADS' strategic development and marketing activities? The results for 2010 were positive on the whole and include many ...

  • Page 47
    tHe bIg pIcture InterVIeW WItH tHe cHIeF StrategY anD MarKetIng oFFIcer "Developing our foundations in the United States and emerging countries, and growing the business in services, security and defence remain clear priorities." Services represent another field of activity you wish to develop as...

  • Page 48
    ... aircraft. Defence, security and space businesses are driven to a greater extent by government demand. Growth in these sectors is more closely related to government budgets as well as strategic priorities and public perceptions of threat. Fragility remains Yet continued financial market volatility...

  • Page 49
    ... bIg pIcture MarKetS & perSpectIVeS Following a remarkable increase in higher margin business travel in the second half of 2010, IATA, in its March 2011 forecast, reported that airlines had earned a US$ 16 billion profit in 2010, up from 2009's US$ 9.9 billion loss. Yet there were stark regional...

  • Page 50
    ... 10% of EADS' revenues. According to PricewaterhouseCoopers, by 2028 regions outside Europe and North America will own roughly half of the commercial aircraft in service. According to data gathered in Airbus Global Market Forecast 2010, in developed economies such as Europe or the United States, on...

  • Page 51
    ... industries. Governments placing large orders often make it a condition that a proportion of the related procurement or production is based in their countries. While this leads to the development of qualified new industrial partners and suppliers it also leads to a risk of new competitors. Aircraft...

  • Page 52
    .... 100 50 0 2010 2011 2012 2013 2014 2015 Emerging markets: Brazil, India, Saudia Arabia, UAE combined European markets: France, Germany, Italy, UK Source: Jane's defence budget Defence exports from the European Union and North America have increased dramatically in recent years to Turkey...

  • Page 53
    ... indicate a move away from big government programmes in favour of tightly managed and leaner Cyber security market: spending by regions in 2010 38% 26% 4% 2% 27% 3% North America Asia-Pacific Middle East & Africa Eastern Europe Western Europe South America Source: Frost & Sullivan Cyber security...

  • Page 54
    conti suc

  • Page 55
    nuing cess

  • Page 56
    ...Flight Equipment Technician, Cassidian Cassidian builds products that have to endure the most demanding operational requirements - over several decades. Expertise in maintenance and related services, as well as technology upgrades, ensure that aircraft like the Eurofighter continue to meet customer...

  • Page 57

  • Page 58
    ... again showing its reliability in this successful programme that supports America's military and homeland security. 8 June 2010 EADS celebrates its 10 anniversary. To celebrate its 10th birthday, EADS invites 10,000 school students from across Europe to visit its sites. As part of the celebration...

  • Page 59
    ... the goal of expanding in this fast-growing market, reinforcing its support and services network throughout the country, and further developing the company's four-decade relationship with Indian industry. 5 November 2010 EADS and Airbus welcome A400M agreement with launch customer nations. EADS and...

  • Page 60
    ... term at 2010 exchange rate levels, supported by production rates rising to meet the demand, firmer pricing and cost improvements on the A380 programme. Airbus delivered a record number of aircraft for the eighth year in a row and, as economic conditions improved, order intake was unexpectedly high...

  • Page 61
    ... aircraft each year. Virgin America became a first customer with a firm order for 30 A320neo in December 2010. Increased production Meanwhile, to accommodate increased production rates for both A320 and A330 aircraft, Airbus recruited 2,200 new employees during the year 2010. In 2011, Airbus plans...

  • Page 62
    ...to hedge rate deterioration. High costs on the A380 programme continued to weigh significantly on EBIT*. Looking to the mid-term, however, at 2010 exchange rate levels profitability should strengthen due to higher volumes, better pricing on delivered aircraft and efficiency gains on A380 production.

  • Page 63
    ... flight certification and was in service with three operators by the end of 2010; the aircraft had won 66 orders from 11 customers. A record number of 91 A330/A340 long-range Family deliveries was achieved. Due to strong market demand, Airbus decided early in 2011 to raise the production rate...

  • Page 64
    ... end of 2010. A further five MRTT were making test flights at the year end, with four undergoing conversion. An A330 MRTT for the UK Royal Air Force successfully completed a series of dry contacts with a receiver aircraft. Airbus Military's revenues reached â,¬2.7 billion, an increase compared to...

  • Page 65
    ... tanker in international markets. Based on this proven success in previous competitions, the US Department of Defense invited EADS North America in 2010 to present an A330 MRTT bid for cost evaluation against its eventual preferred bidder for the US tanker replacement programme. The contract...

  • Page 66
    ... invest in its product range, and to expand its global footprint to prepare for future markets. The SHAPE improvement programme started to deliver results in the form of efficiency savings. Revenues increased to â,¬4.8 billion (â,¬4.6 billion in 2009), reflecting a favorable mix from higher support...

  • Page 67
    ... will pursue its innovation strategy investing in new product and services development and upgrades. The network of industrial capabilities and training and maintenance centres will be further extended. The SHAPE improvement programme aims to generate â,¬200 million in cost savings by the end...

  • Page 68
    ... took place on schedule during summer 2010. Astrium Space Transportation delivered the second of five Automated Transfer Vehicle cargo craft for the International Space Station to the Kourou space port in French Guiana, which was launched in early 2011. Revenues increased slightly to â,¬5.0 billion...

  • Page 69
    ... capacity. Astrium Services further expanded its activities through the extension of the contract to supply the UK Ministry of Defence with secure communication services, and invested in the construction of two Earth observation satellites for Spot Image. Outlook Astrium's medium-term market...

  • Page 70
    ... All four activities - Air Systems, Electronics, Systems and Missiles - contributed. Expanding international presence The Division developed its presence in growing defence markets. In India, the focus of a current Eurofighter export campaign, Cassidian established an engineering centre in Bangalore...

  • Page 71
    ... growth markets such as India, Brazil and the Middle East region with the objective of developing a long-term industrial presence. Cassidian's large system integration capabilities, its experience in leveraging complex technologies and customer proximity will remain the key enablers in securing the...

  • Page 72
    buil the f

  • Page 73
    ding uture

  • Page 74
    ... Deplancq Quality Manager - Assembly, Integration and Test, Astrium Innovation is the foundation of the future. EADS files over 1,000 patents every year and is committed to maintaining investment in new technologies; such as for satellites to monitor the Earth and provide communications to remote...

  • Page 75

  • Page 76
    eaDS annual reVIeW 2010 buIlDIng tHe Future 54 Human Resources EADS management and Human Resources are working together to provide employees greater support and to create a more innovative and engaging working environment. During 2010, EADS stepped up its multi-year engagement programme, aiming ...

  • Page 77
    ...' success. Rich social dialogue EADS enjoys a history of social dialogue which is unique in the aerospace and defence sector. During 2010, an agreement defining the negotiation process at European level was signed with all unions in the Group's four main home countries and with the European Works...

  • Page 78
    ... reVIeW 2010 buIlDIng tHe Future 56 Innovation Innovation has a vital role to play in sustaining the Group's competitive position and in enabling it to achieve its Vision 2020 goals. Driven and coordinated by the Corporate Technical Office (CTO), EADS' research and technology activities in 2010...

  • Page 79
    ... future technology challenges. Self-financed research and development spending - which includes product development - remained roughly stable as a proportion of Group revenues, at 6.4%. The budget of Innovation Works, CTO's global network of laboratories for strategic long-term research, remained...

  • Page 80
    ... critical to the success of programmes, twelve policies for improving programme management were introduced during the year 2010 in areas such as how to allocate resources and decide on leadership of programmes, offer and bid management, and risk management. The policies outline high-level rules and...

  • Page 81
    ... 59 A330/340 Final Assembly Line, Toulouse in dedicated courses at Group level and provided support through a network of peers enabling a constructive exchange of experiences. Supply chain Improving supply chain management was another area of focus. Work began on a common hub with suppliers...

  • Page 82
    ... Sourcing EADS made progress towards adapting its supply chain to the Group's strategic goals. The benefits of an increasingly coordinated approach to common suppliers continued to be realised, and further steps were taken to prepare for a higher level of procurement from countries outside Europe...

  • Page 83
    ... base outside Europe, EADS aims to benefit from cost advantages, to reduce its exposure to euro/dollar exchange rate fluctuations and to benefit, through an increased local presence, from business opportunities in growth markets. Integration EADS General Procurement (EGP), the shared services...

  • Page 84
    ... to the current A320 Family, the A320neo will reduce fuel burn by up to 15% per plane which represents a saving of up to 3,600 tonnes of CO2 per year. Eurocopter is pioneering noise and emissions ratings for the helicopter industry, while also developing eco-efficient blade and engine technologies...

  • Page 85
    ...further. In this framework, the Clean Sky project, a seven-year, â,¬1.6 billion joint technology initiative aims at developing technologies by 2020 that will meet targets set by the Advisory Council for Aeronautics Research in Europe. These are: 50% reduction in perceived noise, 50% reduction in CO2...

  • Page 86
    .... International organisation for Standardisation (ISo) ISO is a network of national standards institutes that sets standards for the benefit of business and the wider community. Innovation Works EADS' global organisation that conducts strategic research, inventing the technologies needed for product...

  • Page 87
    ... extended air Defence System (MeaDS) A NATO-managed project designed to replace the Patriot missile defence system. nitrogen oxides (nox) NOx are a group of gases that contribute to climate change. parapublic The adjective describing organisations linked to the public sector. power8 An Airbus cost...

  • Page 88
    eaDS annual reVIeW 2010 Addresses 66 EADS HEADQUARTERS european aeronautic Defence and Space company eaDS n.V. Mendelweg 30 2333 CS Leiden The Netherlands Tel + 31 71 524 56 00 HEAD OFFICES In France: EADS 37, boulevard de Montmorency 75781 Paris cedex 16 France Tel + 33 1 42 24 24 24 In germany: ...

  • Page 89
    ... 17 85399 Hallbergmoos Germany Tel + 49 811 80 0 novation, ses are alue. re starts today. EADS STRATEGY AND MARKETING ORGANISATION Tel + 33 1 42 24 24 24 - Fax + 33 1 42 24 26 19 representative offices europe Ankara, Turkey Tel + 90 312 439 89 64 Fax + 90 312 439 70 07 north america Ottawa, Canada...

  • Page 90
    eaDS annual reVIeW 2010 68 Shareholder Information Visit our website at www.eads.com Financial calendar Investor relations contact: Full Year 2010 results release: 9 March 2011 toll-free telephone numbers: France: Spain: 0 800 01 2001 00 800 00 02 2002 Germany: 00 800 00 02 2002 First Quarter...

  • Page 91
    ... Report suite 2010 consists of: Annual Review 2010 Flight into the Future Registration Document 2010 Financial Statements Design and produced by - Written by The Clerkenwell Consultancy - Printed by Chirat. leaï¬,et - Photographs © by EADS: Abaca/Guibbaud, Exm/Gousse, Geoffrey Lee - Airbus...

  • Page 92
    ... EADS N.V. Annual Review www.eads.com European Aeronautic Defence and Space Company EADS N.V. Mendelweg 30 2333 CS Leiden The Netherlands In France 37, boulevard de Montmorency 75781 Paris cedex 16 - France In Germany 81663 Munich - Germany In Spain Avenida de Aragón 404 28022 Madrid - Spain 2010