Airbus 2015 Annual Report Download - page 50

AIRBUS GROUP REGISTRATION DOCUMENT 2015 l 18 l
Risk Factors
2 Business-Related Risks
Programme-Specific Risks
In addition to the risk factors mentioned above, the Company
also faces the following programme-specific risks (while this
list does not purport to be exhaustive, it highlights the current
risks believed to be material by management and could have a
significant impact on the Group’s results and financial condition):
A350XWB programme. In connection with the A350XWB
programme, after fourteen successful deliveries to four
airlines in 2015, the Company faces the following main
challenges: ensuring satisfaction of first operators and high
quality support to its operations; maintaining supply chain
performance and production ramp-up; controlling and reducing
the level of outstanding work in final assembly line; managing
recurring costs beyond the initial ramp-up phase; maintaining
customisation and head of versions ramp-up; and maintaining
the development schedule of A350-1000XWB to ensure entry
in service as planned.
A380 programme. In connection with the A380 programme,
the Company faces the following main challenges: secure order
flow in order to maintain current rate of production in the medium
term; making continued improvements to lower the resources
and costs associated with designing each customised “head
of version” aircraft for new customers, in order to allow a higher
number of head of version to be completed each year; and
managing maturity in service. Further reduction of fixed costs
to protect break even at lower volumes has started. However
the success of some of the running sales campaigns will be
key to mitigate the risk of the reduced backlog.
A320neo programme. In connection with the A320neo
programme, the Company faces the following main challenges:
management of stress in the supply chain as a result of the
industrial ramp-up; meeting the engine development status
including performance targets, and its schedule; ensuring the
availability of skilled personnel for the programme; ensuring
maturity and service readiness for early operations. The
transition from A320ceo (current engine option) to A320neo
(new engine option) has begun in 2016 and will finish in 2019. The
main focus will be with the slower start of PW engine deliveries
for A320neo, as well as further ramp-up.
A330 programme. In connection with the A330 programme,
the Company proactively addressed the current market situation
by reducing production to rate 6 per month. The commercial
transition has been secured at the lower rate, which helps
mitigate against production gaps. The A330neo development
progresses as planned and no new challenge emerged in 2015.
A400M programme. In connection with the A400M programme,
the Company faces the following main challenges: finalising
the development, tests and associated documentation to
enable progressively enhanced aircraft capabilities through
standard operational clearance (SOC1 to3), such as cargo
management and aerial delivery, self-defence and protection,
air to air refuelling; continuing production ramp-up; managing
the retrofit campaign and and finalising the development of
in-service support goods and services as well as providing
high levels of service for integrated logistic support. Industrial
efficiency, military capability and associated costs remain a
challenge during the rampup phase. Management is working
with the customers to agree a schedule of military capability
enhancement and deliveries as well as reviewing the escalation
formulae. Industrial recovery measures have been identified
and management is focused on delivery, but risk remains.
The mission capability roadmap (including the achievement
of the respective milestones) and the delivery plan remain
under negotiation with OCCAR/Nations and are expected to
be finalised in 2016. For further information, please refer to the
“— Notes to the IFRS Consolidated Financial Statements —
Note10: Revenues, cost of sales and gross margin”.
NH90 and Tiger programmes. In connection with the NH90
and Tiger programmes, the Company succeeded in the
negotiations of contract amendments with France and Germany,
whilst renegotiations of some other contracts are still ongoing.
In connection with multiple fleets entering into service it faces
the challenge of assuring support readiness.
H175 programme. In connection with the H175 programme
produced in cooperation with Avic, the Company faces the
following main challenges: after the certification by EASA and
the delivery of the nine first H175 for Oil and Gas operations, the
Company is proceeding with the industrial ramp-up, mastering
the maturity plan of the aircraft and further certifications for new
missions planned for 2016 and 2017.
Border security. In connection with border security projects,
the Company faces the following main challenges: meeting the
schedule and cost objectives taking into account the complexity
of the local infrastructures to be delivered and the integration of
commercial-off-the-shelf products (radars, cameras and other
sensors) interfaced into complex system networks; assuring
efficient project and staffing; managing the rollout including
subcontractors and customers. Negotiations on change
requests and schedule re-alignments are currently ongoing.
Financial Statements 2015
11 22 33 44 55
QRegistration Document 2015
Annual Report 2015 Financial Statements 2015