• Steady deliveries thanks to successful order book management
  • EBIT* before one-off: € 1.7 billion
  • EBIT* of € 1.1 billion impacted by foreign exchange effects
  • Net Income: € 0.3 billion
  • Net Cash at € 8.1 billion: a key strength
  • A400M outcome remains subject to ongoing negotiations with launch customers

The nine months results of EADS (stock exchange symbol: EAD) reflect the Group’s successful efforts in prudently managing operations and backlog in a currently challenging business environment. Deliveries continued to be steady across all businesses. Revenues increased slightly to € 29.7 billion. The EBIT* before one-off amounted to € 1.7 billion. Foreign exchange effects in particular have weighed on EADS’ nine months EBIT* of € 1.1 billion. The order intake of € 24.6 billion mirrors the present slowdown in the commercial segment. EADS’ order book of more than € 378 billion provides a solid platform for continued deliveries in the future. The Net Cash Position stands at € 8.1 billion and strengthens the Group’s position in a volatile economic environment.

“Given the challenging commercial market situation, EADS’ nine months results demonstrate the Group’s resilience in the economic crisis so far. Protecting our cash and managing the order book and deliveries – these business priorities served us well this year. I am particularly satisfied that we received the go-ahead from our customers for the Eurofighter Tranche 3a,” said Louis Gallois, CEO of EADS. “New programmes require our utmost attention. Regarding A400M, we are working with our customers to reach an acceptable solution for all parties and to put this programme on a solid long-term footing. Additionally, the A380 programme is still a matter of concern; industrial and financial reviews are underway.”

Revenues of EADS stood at € 29.7 billion (9m 2008: € 29.4 billion), supported by stronger commercial aircraft deliveries at Airbus (358 units compared to 349) but offset by lower revenue recognition in the A400M programme and price deterioration on commercial aircraft deliveries. Growth at Astrium (up 17 percent) and Eurocopter (up 9 percent) contributed to the Group’s positive revenue development.

EBIT* before one-off – an indicator attempting to capture the underlying margin of the business by excluding non-recurring charges or profits caused by movements in provisions or foreign exchange impacts – stood at € 1.7 billion (9m 2008: € 2.6 billion). Compared to the previous year, the volume increase and Power8 savings were more than offset by degradation of hedge rates, cost increases and the price deterioration on aircraft deliveries. Progress on the A380 is slower than expected.

The Group’s EBIT* was further burdened by exceptional negative foreign exchange impacts and dropped to € 1,089 million (9m 2008: € 2,018 million).

The Group achieved a Net Income of € 291 million (9m 2008: € 1,082 million), or earnings per share of € 0.36 (earnings per share 9m 2008: € 1.34). It was weighed down by the deterioration of EBIT* and foreign exchange revaluations impacting the finance result. In total, when compared to 2008, the combination of hedging and revaluation effects resulted in a negative impact of € 1.7 billion on the net income before tax. Self-financed R&D expenses slightly increased to € 1,834 million (9m 2008: € 1,792 million), which underlines EADS’ constant attention to innovation. R&D is expected to ramp up in the last quarter of 2009.

Free Cash Flow before customer financing dropped to € -892 million (9m 2008: € 1,859 million) including an outflow for the A400M of € -260 million. The deterioration is mainly due to lower EBIT* before one-off, a higher ramp-up in inventory and a lower inflow of advance payments compared to the first nine months of 2008, which benefited from strong inflowing orders at Airbus and Eurocopter. Free Cash Flow in the first nine months of 2009 benefited from a healthy inflow of advance payments. Inventories have increased, notably at Airbus. Customer financing for aircraft has remained limited within the first nine months but is expected to increase in the fourth quarter. Free Cash Flow after customer financing amounts to € -1,182 million (9m 2008: € 1,867 million). The Group’s Net Cash position stands at € 8.1 billion (year-end 2008: € 9.2 billion) and continues to serve as a solid basis for EADS in the present market environment. In August, EADS refinanced its € 1 billion Eurobond which will mature in March 2010, maintaining flexibility to this financing platform.

The seasonality of EADS’ defence and institutional business means that top, bottom line and cash performance of those activities tend to be back-loaded.

The Group’s order intake decreased to € 24.6 billion (9m 2008: € 88.7 billion), reflecting the weaker commercial environment. On 30 September 2009, the order book of EADS stood at € 378.0 billion (year-end 2008: € 400.2 billion), including a reduction of € 14 billion due to the revaluation at a weaker US dollar at the end of September compared to the end of December 2008. The defence order book remained stable at € 54.9 billion compared to year-end 2008. Thanks to recent contract awards for the Brazilian military helicopters, the Saudi Arabian border security project and the Eurofighter Tranche 3a, all of which are yet to be booked, the defence order book will see a substantial upswing in the fourth quarter.

At the end of September 2009, EADS had 118,149 employees (year-end 2008: 118,349).

With regard to the A400M programme, negotiations with the customer OCCAR and the launch nations, which are ongoing, enter the difficult last phase. As previously reported, the current phase of negotiations provides an opportunity for all parties involved to realign the programme. This period gives room to rebase the contract on realistic conditions acceptable to all parties. EADS intends to reduce any further potential loss, but the full financial consequences of the delays will only be known once the negotiations are finalised.

Together with its suppliers and partners, EADS has progressed with the A400M programme from a technical perspective. With a total of 18 flights and 55 flight hours, the flight test bed for the engine has now been completed. Additionally, the final first flight version of the FADEC software has been received. Testing on the Iron Bird is providing satisfactory results. Given the technical progress achieved, the A400M’s first flight is anticipated to take place around the end of the year.

Due to the continuing high level of uncertainty on the programme, EADS retained the early stage accounting treatment of this programme. ** This resulted in an EBIT* impact of € -224 million for the first nine months.

Substantial negative income statement impacts may still have to be booked in future periods depending on the progress of development and the outcome of negotiations on the A400M programme.

EADS regrets the decision of the South African government to withdraw from the A400M programme and to cancel its order for eight aircraft. Industrial and financial implications for EADS have to be assessed precisely.


As in many industries, the macro-economic environment, which includes the recent oil price increases, has impacted the financials of EADS’ commercial customers. The deterioration creates a risk on the commercial delivery outlook. Nevertheless, the Group is cautiously envisaging an improvement of the economic and market conditions in the next months.

Looking ahead to 2010, the Group is still cautiously monitoring its production rates in a soft market environment. Delivery of Power8 savings, a better aircraft pricing level and further progress in space and defence will be challenged by deterioration of hedge rates and uncertainties surrounding the A380 and if unresolved in 2009 the A400M.

October 2009 figures further confirm the bottoming out of the cycle for freight and passenger traffic, notably in emerging economies. Worldwide passenger traffic has increased for the first time since November 2008.

From an economic standpoint, the continuous weakening of the Dollar – although not an immediate threat in the short term thanks to the Group’s long-term hedging policy and cost-cutting initiatives – is challenging EADS’ performance because of a weakening hedge book over time. The long-term Dollar level is an important driver for EADS’ earnings power over the coming years.

In a challenging market, EADS maintains its estimate for new gross orders figure of up to 300 aircraft in 2009. Production rates remain stable. 2009 deliveries are expected to be around 490 aircraft. For 2010, EADS is still working with its customers to establish a total delivery outlook including the A380 programme. Using € 1 = $ 1.39 (used in the previous guidance) as the average spot rate, EADS 2009 revenues should be roughly in line with the 2008 level. However, further deterioration of exchange rates in the fourth quarter could lead to slightly lower Group revenues.

Due to ongoing uncertainties on the magnitude of the potential A400M and A380 charges in the fourth quarter, EADS is not able to give a guidance for EBIT* for the full year. Under a continuation scenario, which is deemed the most probable, the A400M provision for which € 2.4 billion in charges have already been accrued has a wide range of possible outcomes depending on the negotiation process and could substantially alter the financial statements of EADS in the future.

EBIT* before one-off for full-year 2009 should amount to around € 2 billion. In a difficult environment, the Group’s Cash Flow management continues to deliver better results than expected with a cash-flow consumption now expected to be less than € 1 billion (excluding A400M) including lower customer financing needs than anticipated.


EADS uses EBIT pre goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to such items as depreciation expenses of fair value adjustments relating to the EADS merger, the Airbus Combination and the formation of MBDA, as well as impairment charges thereon.


As the outcome of the A400M construction contract cannot be estimated reliably, EADS can currently not comply with all requirements to account for the contract under the estimate-at-completion accounting methodology. Consequently and in accordance with IAS 11 (Construction Contracts), EADS has suspended the application of estimate at completion methodology accounting (“milestone accounting”) and has then recognised contract costs incurred to date as an expense directly in the income statement as well as corresponding revenues as far as such contract costs incurred are expected to be recoverable under the “early stage“ method of accounting. The cost-at-completion provision was then updated only to cover additional losses under the contract which EADS was able to estimate reliably. (For more details refer to the “Unaudited Condensed Consolidated Financial Information of EADS N.V. for the nine-month period ended September 30, 2009”).