Airbus 2010 Annual Report Download - page 41

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LONG-TERM VALUE
During the first decade of EADS’ existence the dollar lost
30% in value against the euro. As a consequence, the
dollar rate in our hedge book has continued to deteriorate
from year to year.
Exposure to the dollar has not changed in principle, and
the strategy to protect ourselves has not changed either:
we hedge our exposure in the financial market against
short-term fluctuation of the dollar, buying us time to adapt
the cost base, and we try to increase natural hedging
through increasing the dollar cost base. As an example,
for our new aircraft programmes such as the A350 XWB,
we have increased the level of dollar sourcing to mitigate
currency risks. As new programmes ramp up, we should
see a gradual increase in the level of natural hedging
and a reduction in the risks associated with exchange
rate fluctuations.
EADS’ underlying profitability is expected to be
roughly stable in 2011. What are you doing to improve
profitability beyond the current level?
We have clear plans to improve our profitability going
forward. Cost saving and improvement programmes are in
progress across the Group. EADS is currently working on
a further integration and cost saving programme referred
to as Future EADS. In addition, all Divisions are running
their transformation and cost cutting plans to adapt to
their new competitive environment and Airbus, after the
success of Power8, is working on further continuous
improvement measures beyond 2012 to enhance
competitiveness, compensate for inflation and achieve
profitability targets.
On top of that, EADS is introducing in 2011 a new
top-down target setting process which is specifically
structured to foster the necessary personal incentives and
accountabilities for EADS’ long-term profitability ambitions.
How would you sum up EADS’ perspectives
for the medium term?
I would say we are in a good position. We can capitalise
on the strongest 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 risks, the A380
and A400M, made huge improvements in 2010 and we are
fully focused on execution of the A350 XWB programme.
Our backlog and net cash position are two key assets for
the future. I believe we are well set for future profitable
growth from 2012 onwards, as the improved commercial
environment leads to increased demand for aircraft.
“I believe we are well set for future
profitable growth from 2012 onwards,
as the improved commercial environment
leads to increased demand for aircraft.”
INTERVIEW WITH THE CHIEF FINANCIAL OFFICER
19