Airbus 2015 Annual Report Download - page 94

AIRBUS GROUP REGISTRATION DOCUMENT 2015 l 62 l
Management’sDiscussion andAnalysisofFinancial Condition andResultsofOperations
2.1 Operating and Financial Review
In 2015, Airbus has delivered fourteen additional aircraft. The
industrial ramp‑up preparation is underway and associated
risks will continue to be closely monitored in line with the
schedule, aircraft performance and overall cost envelope, as per
customer’s commitment. Despite the progress made, significant
challenges remain with the ramp‑up acceleration.
A400M programme. Technical progress on the A400M
programme resulted in the recognition of A400M‑related
revenues of € 0.5billion in 2012, € 1.0billion in 2013 and
€ 1.6billion in 2014 and € 1.6billion in 2015.
In 2013, the A400M programme achieved civil and military
certification. The initial two A400Mswere delivered to the
French Air Force while the third aircraft, for Turkey, was awaiting
acceptance in the delivery centre at the end of 2013.
There were eight aircraft deliveries in 2014 – four to France,
two to Turkey and one each to Germany and to the UK. In the
last quarter of 2014, management reviewed the programme
evolution mostly driven by military functionality challenges
and industrial ramp‑up together with associated mitigation
actions and recorded based on management best estimate
an additional net charge of € 551million for the period ended
31December 2014.
An additional eleven A400M aircraft were delivered in 2015,
resulting in twenty‑one cumulative deliveries up to 31December
2015.
Industrial efficiency and military capability 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.
Management reviewed the programme evolution and estimated
contract result driven to a large extent from the implications of
the accident, as well as the impact of low inflation on the price
revision formulae, delays in military functionality and deliveries,
commercial negotiations, cost reduction targets and challenges
in the industrial ramp‑up, together with associated mitigation
actions. As a result of this review, Airbus Defence andSpace
recorded an additional net charge of € 290million in the second
quarter of 2015. The detailed review continued in the second
half of 2015 however no further net charges were deemed
necessary.
The A400M SOC1 and 1.5 milestones remain to be achieved.
SOC1 fell due end October2013 and SOC1.5 fell due end
December2014. The associated termination rights became
exercisable by OCCAR/ Nations on 1November 2014 and
1January 2016, respectively. SOC2 fell due end December2015
and is still in the 12‑month grace period. Management judges
that it is highly unlikely that any of these termination rights will
be exercised.
The A400M programme remains in a critical phase and
associated risks will continue to be closely monitored.
A320 programme. Joint European and US certification for the
A320neo was received in the fourth quarter of 2015 with the
first delivery following in January2016. Despite some schedule
set‑backs, the A320neo ramp‑up preparation is underway with
the focus on maturity and service‑readiness for early operations
in line with customer expectations.
The Group makes estimates and provides, across the
programmes, for costs related to in service technical issues
which have been identified and for which solutions have been
defined, which reflects the latest facts and circumstances. The
Group is contractually liable for the repair or replacement of
the defective parts but not for any other damages whether
direct, indirect, incidental or consequential (including loss of
revenue, profit or use). However, in view of overall commercial
relationships, contract adjustments may occur, and be
considered on a case by case basis.
Restructuring provisions. In 2013, a provision of € 292million
was booked relating to the restructuring of the Airbus Defence
andSpace Division and Headquarters. In 2014 the restructuring
programme remained on track with a reduction of 1,900
positions at the end of the year. After reassessing and adjusting
the provision in 2015, € 41million has been released. At the
end of 2015 a reduction of around 3,700 positions has been
achieved (active workforce and temporary staff).
2.1.1.4 Current Trends
AirbusGroup expects the world economy and air traffic to grow
in line with prevailing independent forecasts and assumes no
major disruptions.
In 2016, Airbus expects to deliver more than 650aircraft, and
the commercial order book is expected to grow.
Financial Statements 2015
11 22 33 44 55
QRegistration Document 2015
Annual Report 2015 Financial Statements 2015