avatar Airbus SE Finance, Insurance, And Real Estate

Pages

  • Page 1

    European Aeronautic Defence and Space Company EADS N.V. Annual Report 2001


  • Page 2

    Contents Financial Markets & Policy 10 EADS at a Glance 2 Strategic Overview 12 Key Figures 4 Market Overview 14 Message from the Chairmen 6 Feature Section 18 CEOs: Answering to our Stakeholders 8 Business Structure 30 EADS in 2001 Revenues €30.8bn Order intake €60.2bn Order book €183.3bn EBIT* Earnings before interest and taxes €1.7bn Earnings per share* €1.16 Work force (number of employees) 102,967 *pre-goodwill amortisation and exceptionals


  • Page 3

    Airbus 32 EADS International 52 Financial Statements 60 Military Transport Aircraft 38 Headquarters Organisation 54 Addresses 98 Aeronautics 40 Human Resources 55 Shareholder Information 100 Defence & Civil Systems 44 Corporate & Social Responsibility 56 Space 48 Corporate Governance 58 European Aeronautic Defence and Space Company The Group was formed in 2000 by the merger of aerospace and defence industry leaders in France, Germany and Spain sharing a common vision of the future. EADS is today the second largest global aerospace and defence group in the world. We hold commanding market positions in civil and military aircraft businesses, space technology, helicopters, missile systems and support services. Our clear, integrated business strategy is focussed on growing profitably by meeting and anticipating the needs of our customers. We employ world-class advanced technology, and seek constant improvement to our products, processes and ways of doing business. In a fast-developing field, the diversity, creativity and openness to change of our entire workforce are key competitive advantages. Our actions are driven by one overriding principle: reliability. We deliver what we promise. We are committed to adding value for all our stakeholders by being adaptable, market driven and innovative. EADS 2001 1


  • Page 4

    EADS at a Glance EADS is a leading global aerospace and defence company, with a unique portfolio of products, systems and services ranging from space launchers, satellites and missile systems to jet airliners, military transport and fighter aircraft, helicopters as well as maintenance and conversion services. Airbus Military Transport Aircraft p.32–37 p.38–39 Description of the business Now an integrated company, 80% This Division produces light and medium owned by EADS, Airbus produces the military transport aircraft and Airbus world’s best-selling family of jet airliners. military derivatives. It also manages the Airbus jets have incorporated many A400M heavy military transport aircraft technical breakthroughs, such as programme. The A400M uses Airbus fly-by-wire systems, and offer airline technology and design, and will offer operators considerable advantages unique operational flexibility. in terms of economical operation and environmental responsibility. Highlights of the year 2001 • 1,575 aircraft in order book • 8 countries sign up for the A400M heavy military transport programme • 85 firm orders and 12 customer commitments for A380 • Contract signed for 8 C-295s for the Polish Air Force and acquisition • A380 development programme on of 51% in Polish PZL Warszawa track and on budget Okecje • A340-500/-600 to enter service • CN-235s ordered for the in 2002 French Air Force • A318 readied for test flight • The CN-235 selected as the fixed wing platform for the US Coast • ACJ corporate jetliner takes Guard’s Deepwater programme increasing share of its market Airbus A380 A400M 2001 (in €bn) Revenues 0.5 Order book 1.3 Order book/revenues 2.6 Years 2 EADS 2001 EADS at a Glance


  • Page 5

    Aeronautics Defence & Civil Systems Space p.40–43 p.44–47 p.48–51 This Division includes Eurocopter, the This Division offers customers This Division is the third-largest space world number 1 in civil and military a comprehensive portfolio of products systems unit in the world, designing, helicopter orders, and manufactures and services – missile systems, defence developing and manufacturing telecom combat aircraft like Eurofighter, regional electronics including surveillance and and earth observation satellites, orbital airliners, general aviation and business reconnaissance systems, radar, avionics infrastructure and launchers, as well as aircraft. The Division also provides and electronic warfare products, secure providing services related to space maintenance and aircraft conversion telecommunications, test solutions and telecommunications and being active in for both military and civilian users. support and engineering services for optronics and laser technologies. governmental customers worldwide. • Eurocopter share of the civilian • MBDA created – the world’s • Ariane 4 gains new market rises to 57% second largest missile systems reliability record company • Over 500 military helicopters • Step 3 of the Ariane 5 in order book; major export • Strengthening of Systems and programme approved by successes for Tiger and NH90 Defence Electronics activities the ESA Ministerial Conference in 2001 through partnerships and contracts, e.g. in the UAV field • Skynet 4 successfully • ATR Integrated created accomplished • Strengthening of secure telecom • A €1.1 billion contract signed business through acquisition of • Early 2002: UK MoD decides on for Eurofighter training aids the UK encryption leader (Cogent) Skynet 5, Astrium to supply satellites • Creation of a dedicated “Services” unit, concentrating particularly on outsourced government services Eurofighter Aster missile Envisat 2001 (in €bn) 2001 (in €bn) 2001 (in €bn) Revenues 5.1 Revenues 3.3 Revenues 2.4 Order book 13.7 Order book 9.1 Order book 3.8 Order book/revenues Order book/revenues Order book/revenues 2.7 Years 2.8 Years 1.6 Years EADS 2001 EADS at a Glance 3


  • Page 6

    Key Figures In 2001, EADS outperformed all set financial targets. EBIT margin pre-R&D increased to 12.1% and year-end net cash position was positive, at €1.5 billion. • Revenues grew by 27% to Revenues EBIT pre-goodwill Internally €30.8 billion, a 10% growth amortisation & financed R&D excluding Airbus 100% first exceptionals time consolidation • EBIT margin pre-R&D increased from 11.3% to 12.1%, in spite of heavy non-recurring expenses • Internally financed R&D rose, ■ 30,798 ■ 1,694 ■ 2,046 as anticipated, from 5.5% of ■ 24,208 ■ 1,399 ■ 1,339 00* 01 00* 01 00* 01 revenues to 6.6%, mostly due to the development of the value All figures are in millions of euros creating A380 programme *2000 is proforma figures; Airbus 100% consolidation from 2001 • Free Cash Flow reached €774 Net Result Net Cash (debt) Free Cash Flow million, and thus contributed to position the positive net cash position of €1.5 billion at year-end 2001 01 • Order book reached €183.3 billion, a 39% growth from 2000, or 16% excluding the effect of Airbus 100% first time consolidation ■ 1,372 ■ 1,533 ■ 774 00* ■ (909) ■ 2,143 ■ 1,531 00* 01 00* 01 EADS increased revenues by 27% in 2001 charges and exceptional depreciation of to €30.8 billion, exceeding the 20% growth assets; these were offset by a better than target. Revenue growth was 10% without expected performance in other Divisions the effect of the first time Airbus SAS 100% and by over €100 million of additional consolidation, reflecting higher Airbus savings resulting from merger integration deliveries and strong growth in all divisions synergies. Indeed, the Group has except for Space Division. EBIT (Earnings outperformed its target for 2001 and is before interest and taxes, pre-goodwill and ahead of initial plans to deliver €600 million exceptionals) of €1.7 billion was up by 21%, of recurring synergies by 2004. surpassing the 15% initial growth target. 2001 EBIT includes the first time 100% Net Result reached €1.4 billion, including consolidation of Airbus and the planned exceptional items namely from the Airbus increase in Research & Development SAS and MBDA creation. Net result pre- (R&D) expenses. Moreover, the EBIT target goodwill and exceptionals turned positive was exceeded despite non-recurring from a loss of €45 million in 2000 to €936 expenses at the Defence and Civil Systems million in 2001, representing €1.16 Division and at the Space Division, mostly earnings per share. resulting from continuing restructuring 4 EADS 2001 Key Figures


  • Page 7

    Order Intake Order Book ■ 60,208 ■ 183,256 ■ 49,079 ■ 131,874 00 01 00 01 Revenue breakdown by market Revenue breakdown by geography 20% 11% 10% 45% 80% ■ Europe 45% ■ North America 34% ■ Civil 80% ■ Asia 10% ■ Defence 20% 34% ■ Rest of the world 11% Free Cash Flow reached €0.8 billion, Finland, Norway and Sweden, and the reflecting a strong operating cash flow and C-295 military transport aircraft ordered by the continuing tight control of working Poland. The €18 billion A400M project is capital requirement, while we have not included in the 2001 order intake. maintained our investment effort to secure our future growth. At year-end 2001, the order book of €183.3 billion was unparalleled in the At the year-end, we still posted a solid industry; it represents more than six years positive net cash position of €1.5 billion. of revenues and each of our five Divisions has a backlog exceeding one year and Order intake was up 23% to €60.2 billion, a half of revenues. twice as high as revenues. This strong performance illustrates not only the success of the A380 project for which we booked 85 firm orders; it also clearly demonstrates the competitiveness of our military programmes in export markets: with the NH90 ordered by Portugal, EADS 2001 Key Figures 5


  • Page 8

    Message from the Chairmen Welcome to this report on the first full operating year of the European Aeronautic Defence and Space Company. Last year, we spoke of setting out on an exciting journey. Synergies achieved through Group sourcing deserve special Today, we are happy to report on the first successful steps of mention, and other initiatives include the exchange of best that journey. Our financial performance and the strong market practice, technologies and knowledge throughout the position of our products equip us well to cope with a particularly Group in the areas of Research and Technology (R&T), challenging environment for our industry. manufacturing, engineering and product support. Since its inception in July 2000, EADS has established itself As a leader in the aerospace and defence industry, EADS firmly as the second largest company in the aerospace and continued to drive further integration and industry consolidation defence industry, winning important new customers in export in 2001. Among other initiatives, we established Airbus as a fully- markets, making new technological advances, launching new integrated business and created MBDA, the world’s no. 2 missile products such as the Airbus A380 and markedly improving its systems company. financial results. We have made substantial progress with the integration of the We are well-positioned to face the Group’s operations. About 670 merger integration projects are currently under way to create value through inter-company future’s challenges, and we have the will synergies and performance improvements and the more efficient and resources to emerge all the stronger use of existing know-how and capital investment. This includes 276 projects with a direct impact on EBIT. The results already for meeting them head-on. achieved are well in excess of expectations. Looking to the future The year, of course, was dominated by the appalling events of 11th September. Inevitably, these have had an important impact on our different businesses, and there is no doubt whatsoever that we face major challenges in the years ahead. 6 EADS 2001 Message from the Chairmen


  • Page 9

    Manfred Bischoff and Jean-Luc Lagardère However, we have full confidence in the strategy laid down by Most importantly, we have a unique team of talented, resourceful the Board, and we are further strengthening the Group’s and committed people, capable of developing the new ideas, efficiency and profitability. Financial stability and soundness is our products, services and technologies that our customers – and the clear priority. Airbus is already operating more efficiently as an world at large – will need in the future. integrated company, and has confirmed the encouraging potential for the A380 superjumbo; MBDA has led consolidation In short, we are well-positioned to face the future’s challenges, in the field of missiles; and we are forging new partnerships with and we have the will and resources to emerge all the stronger US industry – another of our major priorities. for meeting them head-on. It also remains a fact that we have a very strong portfolio We are going forward, fully committed to safeguarding the best of products, which gives us a robust competitive position in interests of our shareholders, customers and employees; and we world markets, whatever the conditions may be. These include look forward to reporting further progress in the coming months. new-generation commercial aircraft designed around our customers’ requirements for economy, environmental safety and operating efficiency, as well as technologically-advanced defence systems which are able to contribute significantly to military effectiveness and – ultimately – to political stability. We have, too, a growing capability to provide support services for customers both civil and military, in an increasing number of countries and locations. Manfred Bischoff Jean-Luc Lagardère Chairman Chairman EADS 2001 Message from the Chairmen 7


  • Page 10

    Answering to our Stakeholders The Chief Executive Officers address some of today’s key questions. What, for EADS, was the most important feature of the Our new-generation military helicopters – Tiger and NH90 – 2001 financial results? won contracts worth over €1.6 billion from Australia, the Nordic countries and Portugal, against heavy competition. We now have We have once again fulfilled the promises we made at the outset over 500 military helicopters in our order book. This shows just of the year. EADS is one of the few companies in our industry to how competitive our military products are in export markets – have met, and even surpassed, its financial targets despite the which is an excellent sign for the future. events of 11th September, with sales up more than 27%, EBIT* up to €1.69 billion and a net cash position of €1.5 billion at the end Another significant step in defence was the creation of the of 2001. This was achieved despite some heavy non-recurring MBDA company in partnership with BAE Systems from the UK expenses – mostly in the Space Division, but also in Defence and Finmeccanica from Italy. MBDA is the second-largest missile and Civil Systems Division. Moreover, our free cash flow company in the world. It has an outstanding order book generation demonstrated again that we can self-finance the Airbus amounting to €12 billion – nearly six years’ revenues. We’ve also A380 programme, without jeopardising our financial situation. reinforced EADS military telecom activity by the acquisition of COGENT, the UK leader in communication encryption. Can you point to some of the more significant events of the year? In our civil business, Airbus was the clear market leader in 2001, taking 61% of global gross orders in value. The A380 programme Our defence business strengthened in 2001. The biggest single also got off to an excellent start, with 85 firm orders and 12 piece of news was the agreement by eight countries in customers commitments being signed with nine different clients. December 2001 to go ahead with the A400M military transport Importantly, 37 of those 85 were signed after the 11th September, aircraft. This is the first European aircraft in a market segment up demonstrating the strong market demand for this programme, to now dominated by US suppliers. EADS is the prime contractor even in a downturn. for this programme which secures over €18 bn of revenues and strong EBIT from 2002 to 2018; the overall project stake for EADS Even so, the slump in air travel is going to hurt the being almost 90% (including 100% Airbus consolidation). group, isn’t it? It is a challenge – particularly for Airbus. Airlines are having severe problems. One immediate effect is that we had to stabilise Airbus deliveries planned now at 300 for 2002, whereas we were previously planning to increase our production rate significantly. *EBIT pre-goodwill and exceptionals. Future A380 building 8 EADS 2001 Answering to our Stakeholders


  • Page 11

    Philippe Camus and Rainer Hertrich But air traffic indicators show a slight recovery at the beginning 2001, representing 20% of our total revenues. Looking at our of 2002. Going forward, we believe that the traffic growth will order book, we foresee that our defence revenues will grow by continue at an underlying average rate of about 5% per year. more than 50% by 2004, including the A400M programme to be Moreover, new products like the Airbus A380 will be entering booked this year. At the same time, the profitability of the service at exactly the right time to benefit from the upturn. defence business should dramatically improve as we complete our restructuring and enter into the delivery phase for most of How well can EADS cope with the current uncertainty? our military programmes. We start with some tremendous strengths – including a current What are your priorities for the coming year? order book of €183.3 billion, or six years’-worth of revenues. It’s bigger than any of our competitors’. Our highest priority is to continue to build shareholder value. We will achieve this by growing our defence business and securing Immediately after 11th September, we implemented a number of our activities in commercial aircraft. This will also involve reducing concrete actions to secure cash and profitability; these include the working capital, tight control of customer financing, a freeze on freeze of all investments and hiring (excluding for the A380 capital expenditure except for the A380 programme and the programme), and new cost saving plans. Thanks to the very high active control of all costs. Our management objective is simple: degree of flexibility built into our production organisation, “Cost Down, Cash Up, Contracts In”. including the high proportion of subcontracting, flexible work agreements and contracts and short production lead times, we are well prepared to weather the storm and secure future profits. Moreover, we have a leading and growing defence business, which will partly offset the effects of the civil aviation downturn. How do you plan to develop your defence business? We are already a defence leader, number two in Europe. Our defence business (including military aircraft of all types and helicopters, military satellites, missiles, defence electronics, secured telecommunication) has strong positions in all segments Philippe Camus Rainer Hertrich and produces combined revenues of €6.1 billion of revenues in Chief Executive Officer Chief Executive Officer EADS 2001 Answering to our Stakeholders 9


  • Page 12

    Financial Markets and Policy During the year under review, the EADS share price went through four main phases. Share price movements Stock price evolution as of March 2002 EADS CAC DAX IBEX BASE 100 EADS Stock Price in € 150 26.4 HIGH 25.07 24.5 22.8 21.0 19.3 100 17.5 15.8 14.0 12.3 10.5 50 LOW 9.14 8.8 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2000 2001 2002 From January to June 2001, EADS shares traded in a range of Between 7th and 21st September, our shares lost half of their value, €20 – €23. This was in fact a good performance at a time when reaching an all time low of €9.14.This was followed by a gradual the major stock indices were moving significantly downwards. recovery, up to €13/14 at the end of 2001 implying that a catastrophic scenario was now behind us. This level is a low Then, for much of the summer, it varied between €23 and €25 – price compared to historical high levels but still represents reaching its all year high of €25.07 thanks to the very encouraging a better performance than stock market indices (CAC 40 namely). level of orders announced at the Paris Air Show. On 28th December 2001, the closing price was €13.64 – a recovery of 49.2% from the year’s low. The third phase started mid August, when the financial markets began to worry about the economic outlook and airline passenger The average volume of trading for the year 2001 was around traffic and wondered whether we had reached the peak of the 1.7 million shares a day. cycle in the aerospace segment. The share price went down to the €18/€19 level. The continuing recovery of the economy and airline traffic at the beginning of 2002 as well as defence growth opportunities (such The fourth phase was triggered by the events of 11th September, as Paradigm and A400M) have already started to support the following which the financial markets became extremely EADS stock price. Moreover, Airbus has confirmed deliveries pessimistic about the economy and airline traffic. All markets around 300 aircraft in 2002, which is close to the 2001 level (325). suffered, but EADS stock like that of other companies of the aerospace sector, was among the worst-hit, following the halting The medium and long term fundamentals of the industry remain of air traffic in the US and the unprecedented 30% fall in air traffic solid with an expected underlying average air traffic growth of in September/October 2001. about 5% and good opportunities for aircraft replacement. 10 EADS 2001 Financial Markets and Policy


  • Page 13

    Axel Arendt Chief Financial Officer EADS Executive Committee Member EADS Board Member Managing challenge and securing growth Following 11th September, EADS management Value Based Management reacted immediately to safeguard value creation To focus even more on cash, EADS has designed a new in this challenging environment. corporate performance metric following the Value Based Management approach. The future top financial performance Preservation of solid profitability and cash levels indicator will be named ‘Cash Value Added (CVA)’ (definition Immediately after 11th September, EADS Finance created below). This will foster a company wide management culture a new business plan based upon revised market assumptions. of value creation. Beginning with this year’s planning process we As a first consequence this led to an adjustment of the Airbus will use CVA for our internal financial target setting. production capacity which is being implemented. Company- wide, all major investments with the exception of the Airbus Our financial policy is driven by our commitment to A380 programme have been screened again, recruitment has creating value, which motivates the investment into been frozen and additional cost saving targets have been set. All profitable businesses and stimulates synergies while Business Units have been challenged to generate and implement maintaining a healthy balance sheet. additional measures in order to preserve solid profitability and cash levels. Definition: The Cash Value Added (CVA) will be calculated by subtracting The benefits from these additional cash and cost saving measures a “capital charge” – using the company’s weighted average cost will come on top of our goals set at the time of the EADS creation. of capital – from the “Gross Cash Flow”. The CVA will be used We confirm our target to deliver a recurring €600 million of as a financial target and performance measure on EADS group additional EBIT by 2004 resulting mainly from group-wide and division level. CVA/Delta CVA will be an element of the purchasing, production and R&D synergy projects, and we compensation evaluation for executives from 2003 onwards. expect that by 2002 we will have achieved half of this amount. The €100 million of additional value created in 2001 (well ahead of target) vindicates this expectation. Combined with our strong positive cash position at year-end 2001, this will enable us to continue with the ramp up of the A340-500/-600 production and the development of the A380 programme – securing our profitable revenues of tomorrow. EADS 2001 Financial Markets and Policy 11


  • Page 14

    Strategic Overview EADS today is the second-largest group in the global aerospace and defence industry, with a unique range of products and services. In 2001, EADS made enormous progress in Beyond Europe, we are actively building international its portfolio strategy of strong, balanced growth partnerships in order to strengthen access to growing markets. between commercial aerospace and defence. Such strategically-driven moves have included the acquisition by our secured telecom subsidiary EADS Defence and Security This portfolio strategy means: Networks (EDSN) of Cogent, the UK’s leading encryption and secure communications company, which has strengthened our • Taking a leading role within the aerospace participation in the Bowman UK defence telecommunication and defence Industry on a European, programme. Other examples have been the purchase of a stake transatlantic and global level; and in Patria, the aerospace leader in Finland, PZL Warszawa Okecje in Poland and Hawker Pacific of Australia. These market footholds • Pursuing new defence opportunities. have already helped us to win export contracts worth over €2 billion. And we are pursuing partnership opportunities in Russia, Improved Market Position Korea, Japan and China, as well as in the Middle East and We aim to achieve a highly visible position in all major aerospace South America. and defence markets around the world. Central to this objective is our active leadership of European From the outset, we have actively sought aerospace and defence consolidation. The creation of the Airbus integrated company has triggered increased efficiency and international partnerships in order to opportunities, whether in new commercial ventures such as the strengthen access to growing markets. A380 or in the defence area with the A400M. The formation of MBDA has established the world’s number two company in missile systems. We shall continue to pursue the necessary Expanding our access to the growing US defence market is restructuring of the European industry, particularly in space a necessary component of our strategy. We are currently working (Astrium and EADS Launch Vehicles), military aircraft and successfully with Northrop Grumman (on Unmanned Aerial defence systems activities. Vehicles (UAV) and NATO’s Alliance Ground Surveillance), with Boeing (on Theatre Ballistic Missiles Defence) and Lockheed Martin (on Medium Extended Air Defence System – MEADS), as well as discussing partnerships on mission aircraft and defence electronics. We anticipate that this trend will continue as we pursue opportunities in areas such as multi-mission aircraft, tankers, and missile defence. 12 EADS 2001 Strategic Overview


  • Page 15

    Jean-Louis Gergorin Executive Vice President Head of Strategic Coordination EADS Executive Committee Member Our ambition is to make EADS the world leader of aeronautics, defence and space. Integrated Defence Strategy Looking to the Future With €6.1 billion of defence revenues in 2001, EADS is the clear One year after the merger, EADS has secured a leadership No. 2 European player. Our defence businesses, including position in its commercial and defence businesses. military aircraft and helicopters, military satellites, missiles and defence electronics currently contribute about 20% of Group Our experience confirms our strategy, which is that a balanced revenues. In the medium term, we aim to increase these defence position between commercial and defence lessens our exposure revenues by more than 50%. to market cycles and ensures steady growth over time. We can expect to see EADS building value through organic growth, Our defence strategy is focused on those mission areas synergies between commercial and defence businesses, and we believe represent the greatest potential growth. through new alliances and acquisitions that increase our presence Coordinated by its Defence Strategy Coordination Group, around the world. EADS is harnessing resources from across the company in the following fields: Intelligence (C4ISR), Deterrence and Power Projection, Survivability and Homeland Security. Current offerings in these areas are: • Intelligence (C4ISR): the Helios remote surveillance satellites, the Eurohawk unmanned aerial vehicle (UAV), the Rubis and Acropol encrypted mobile communication networks and the C-295 Maritime Patrol Aircraft • Deterrence and Power Projection: the M51 ballistic missile, the Eurofighter combat aircraft1, the Scalp Storm Shadow cruise missiles, the Meteor air-to-air missile, the A400M and the CN-235 and C-295 military transport aircraft • Survivability and Homeland Security: the Aster and Meads missile systems. 1 In addition, EADS is a major financial investor in Dassault Aviation (45.94%) which manufactures Mirage and Rafale fighter aircraft, and the Falcon business jets EADS 2001 Strategic Overview 13


  • Page 16

    Market Overview A turbulent 2001 offered both challenge and opportunity. The commercial business faced increased pressures, and in defence, the need was confirmed for new and technologically-advanced solutions for defence strategy and procurement. As the global environment improves, the EADS portfolio of leading commercial and defence products is strongly positioned to emerge stronger and more profitable. Competitive times for our clients The large commercial aircraft market 2001 will be remembered as the first year since the Gulf War 1970–79 1980–90 1991–97 1998–2000 RPK trillion 11% 5.8% 5.8% 7.1% in which the long-term growth in air passenger traffic suffered 3.5 a sharp setback – with obvious repercussions for aircraft manufacturers. 3.0 Gulf war Over the past 40 years, air traffic growth has averaged around 2.5 Oil crisis & 7.5% per year, as the world GDP (Gross Domestic Product) and Iran/Iraq war disposable consumer income have followed a consistent upward 2.0 Asian crisis trend. Deregulation allowed airlines to compete on price and, Oil crisis 1.5 coupled with network expansion, to attract millions of new customers. The large commercial aircraft market is a dynamic 1.0 one, driven by airlines’ changing policies on route structures, demanding a wide and continually-evolving mix of aircraft types. 0.5 Through the years, the challenge for aircraft manufacturers has 0.0 been to provide new aircraft which are more cost-effective to 1970 1975 1980 1985 1990 1995 2000 operate and can meet tougher environmental and noise constraints. In the first half of 2001 the signs of a downturn in World Annual Traffic the commercial aviation industry were already visible. Annual (in Revenue Passenger Kilometers, RPK trillion) international air traffic growth dropped to 2% and US airlines, Source: ICAO for example, had already started predicting losses of up to US$2 billion. A solid recovery is expected, but to predict its timing is still a delicate task. On the one hand, US consumer debt and After the events of 11th September, however, airlines unemployment levels pose risks. On the other, the US economy experienced an additional sharp drop in traffic and have shed is expected to return to health during 2002 and customers’ their excess capacity. confidence in the air transport system is returning. This will inevitably lead airlines, once they have rebuilt their cash positions, While it is only to be expected that 2002 will be a slow one for to re-equip, since much of the capacity they have shed in the the industry, the longer-term prospects are positive. The US downturn consisted of older aircraft, due in any case for Government has acted swiftly and has decisively limited damage replacement. Airlines are also likely to continue the trend towards to airlines by offering, amongst other measures, a US$15 billion harmonised fleets consisting of a smaller number of types. rescue package (of which US$5 billion were cash injections and US$10 billion were guarantees) and passenger numbers have In such an environment, the market-leading Airbus product family recovered more quickly than expected. Meanwhile, major US – covering all types of routes from ultra long-haul to short-haul airlines have reported “bottoming-up” of traffic. While in October with latest-generation designs, outstanding performance, highly 2001 air traffic declined to 78% of the previous year’s, it climbed cost-effective profiles and extensive operational commonality – back to 85/90% in December 2001. should enjoy considerable competitive advantages. 14 EADS 2001 Market Overview


  • Page 17

    Airbus A310 freighter EC135 on a rescue mission Aircraft mission planning The defence market influence the market for defence equipment and services in the The September events have accelerated a number of short and medium term future. developments in the defence environment, re-defined transatlantic strategic relationships between the US and Europe, First, there is a stronger awareness of European gaps in terms of and generated unique and technologically advanced needs for the capabilities required of national armed forces. There will be governments and defence ministries throughout the world. an increased emphasis on homeland protection (better C4ISR, border surveillance, protection against NBC threats, perhaps Following a US government decision prior to 11th September, including some form of ballistic missile defence), force projection the US defence budget for 2002 has been raised towards and deployment – the ability to mount remote operations and to US$334 billion. Further increases are expected from the United supply and reinforce troops far from their home bases. This has States, including an investment of US$13.7 billion to respond evident implications for the demand for military transport and directly to the attacks. Still more raises – up to US$48 billion – in mission aircraft, light, medium and heavy alike. In particular US defence budget are expected for the budget year 2003 to military transport aircraft and military helicopters will be the key carry on the transformation of defence. strategic segments to ensure logistics support in the new force projection policy. Now more than ever, Europe and many other governments are increasing their efforts to analyse their role in global and Also relevant to power projection, the importance of advanced homeland security. There are a number of factors that will technology has been confirmed by the conflict in Afghanistan, which has demonstrated the vastly increased ability of force commanders to attack targets with total precision – both enhancing the effectiveness of attacks and minimising casualties. It has again underlined the value of intelligence derived from satellites, unmanned aerial vehicles (UAVs) and unmanned combat aerial vehicles (UCAVs), real time command and control systems, smart munitions and cruise missiles for deep strikes. Together with the trend to increased system sophistication there will be a request to improve integration, flexibility and interoperability. The key will be the ability of complex systems to provide a seamless flow of information at all stages from intelligence gathering through decision-making and implementation as well as throughout all systems in the operational theatre. Electronic warfare and secured, deployable telecom are amongst key assets to be procured. Total US and Europe Defence Procurement Budget Source: NATO, JP Morgan and others EADS 2001 Market Overview 15


  • Page 18

    Market Overview continued In addition, the market driver that remains is the pressure on manufacturers to provide ever-increasing value for money, despite the growing complexity of their products. This altogether could increasingly lead to further consolidation within the marketplace, as well as to increasing numbers of international partnerships. In addition, we expect many armed forces to discover the virtues of outsourcing repair and maintenance activities, in the drive for cost-effectiveness across all their operations. We believe that EADS’ “young” defence portfolio is well-suited to contribute to and to benefit from virtually all these trends in the sphere of national and international defence. Other commercial markets Civil Helicopters The world-wide market for civil helicopters has been growing during 2001 from 474 deliveries in 2000 to 495 in 2001. This ranges from helicopters for corporate executives and diverse commercial applications to offshore oil operators and state agencies including police forces, medical services and fire fighting teams. Especially after 11th September, the demand for parapublic helicopters has increased significantly. Civil helicopter markets should remain strong over the next five years. Polyphem missile 16 EADS 2001 Market Overview


  • Page 19

    Civil Space 2001 saw difficult conditions in the field of space activity. European institutional budgets were stable or at best slightly increasing, and commercial orders were below last year’s level for several reasons: first, the slower-than-expected development of the market for new telecommunications applications like broadband; second, the ongoing consolidation and restructuring process among major operators, the consequence of which was a reduced or delayed demand for new satellites. In this market, space manufacturers, including Astrium, the 75% controlled EADS subsidiary, generally recognise an over-capacity situation in the telecom satellite market. The global economic environment in 2001 affected overall demand for telecom satellite capacity. The launcher segment was therefore affected by a decline in the total number of commercial launches as well as from heavy competition and pricing from launchers supplied from eastern countries and operated by US companies. EADS 2001 Market Overview 17


  • Page 20

    Airbus A300-600ST ‘Beluga’ Astrium – Re-Entry System IRDT Our ability to adapt swiftly and effectively to change adaptable New ways of thinking are second nature to companies who engineering, purchasing and product support – and during 2001, depend on developing and using leading-edge technologies. they have already delivered value creation of more than €100 million additional EBIT – over 60% above target. Our goal is But at EADS with our multicultural organisation, this adaptability to achieve recurrent additional EBIT of over €600 million by 2004. and openness to change isn’t just a matter of technology; it’s fundamental to the way we approach our whole business, And our new marketing and sales operation – EADS International – our customers and our other stakeholders. And it’s driving is just one more example of the strengths of our merged operations. a process of change that is already achieving results. Sharing knowledge, improving products Improving the organisation Another major advantage for the Group comes from its ability From day one, EADS has been aware that opportunities could to make use of technologies across national and Divisional be created by sharing the resources, experience and know-how boundaries. Increasingly, this is being put into practice, with of its Business Units. This process – Merger Integration – has Airbus skills, for example, being used to develop and produce proved to be a principal building-block for the Group’s future and the A400M. has already produced substantial added value. We are also among the global leaders in partnerships, Some 670 Merger Integration projects including 276 with direct working closely and effectively with companies ranging from impact on EBIT have already been implemented to strengthen the BAE Systems, Thales, Finmeccanica in Europe to Northrop transfer of best practice and the sharing of means, tools and Grumman and Boeing in the US; sharing information, risk and knowledge between Divisions and Business Units. These include technology in order to produce better solutions for the customer initiatives in Research and Technology, manufacturing, at a competitive price. 18 EADS 2001 Adaptable


  • Page 21

    Eurofighter EADS 2001 Adaptable 19


  • Page 22

    In a year of dramatic change for the aerospace and defence industries, the ability of EADS to adapt its operational approach swiftly and effectively has already proved its value. Keeping Airbus on course – First, Airbus conducted with its customers and climbing an in-depth analysis of its order book, to The appalling events of 11th September confirm that it is made up of orders from impacted on the whole world, accelerating customers who are still capable of taking the onset of a global economic recession, delivery of their aircraft as scheduled. and aggravating the cyclical downturn in The company also decreased its customer the civil aeronautical sector in particular. gross financial exposure for the third Thanks to its built-in organisational consecutive year, thus ensuring greater production flexibility, Airbus has been able flexibility to cope with the current difficult to react quickly to this new environment. period. A330 Air Tanker version Next, Airbus reviewed its production plans for 2002 and 2003. Having foreseen a cyclical downturn long before the events of 11th September, Airbus had already begun to slow production ramp-up in the summer of 2001, and currently expects to deliver approximately 300 aircraft in 2002, whereas it was previously planned to Engineer servicing an A310 engine increase annual production rates up to 400 aircraft. 20 EADS 2001 Adaptable


  • Page 23

    This is not a drastic reduction from the The A400M, the large European military 2001 level (325), but rather corresponds to transport aircraft representing the biggest a freeze of production rate. Organisational contract for EADS since its creation, is an flexibility has allowed Airbus to adapt to outstanding example of our ability to this level with no dramatic effect on its adapt to these changing needs. The workforce, whose valuable skills will be A400M transforms civil technology into essential to ensure its continued success in a military product, proving our ability to the anticipated recovery. achieve synergies through cross Business Unit activities, and uses the same flexible production system as used for Airbus. Using established skills in a At the same time, the A400M is able to new context meet the requirements of eight nations Envisat is placed in an Astrium anechoic EADS is determined to grow the proportion and their armed forces, as well as of other chamber to check compatibility of the and importance of its defence activities future customers. And the product itself is various radio frequencies within its business portfolio – adapting to very adaptable: it can be used for the a global environment in which security transport of troops, materials or large and defence issues will be emphasised equipment, such as helicopters or armed much more than during the 1990’s. vehicles. EADS 2001 Adaptable 21


  • Page 24

    First flight Airbus A340-600 A400M What do customers want today? How can we listen to their needs most effectively? What are they likely to need tomorrow? market driven EADS is committed to the creation of maximum value for In the field of mission aircraft, we draw on all existing knowledge its stakeholders – customers, shareholders, employees, local and capabilities within the relevant business units. This “one communities and the wider national and international public. face to the customer” approach creates clear communication – and best technological solutions into the bargain. One example: To achieve that aim we need to understand our stakeholders, the bid to supply Maritime Surveillance Aircraft to the US Coast their businesses, their needs and their objectives. And our track Guard, where all contenders propose to make use of the EADS record of doing precisely that is unsurpassed in the industry. aircraft CN-235 as the fixed-wing platform. The A380 has been designed in consultation with over 80 Other examples of major European projects in which EADS plays different airlines, following research among commercial airlines a key role to meet new market requirements on the military side: managers, pilots, airport authorities – and even passengers. Our • the Skynet 5 satellite programme, in which Astrium will offer a civil aircraft are not only state-of-the-art; they are also backed by new generation of secured telecommunications services to the customer service oriented support. UK MoD • the UK MoD Future Tanker aircraft Bid offer, for which the Our family of helicopters, now complete, is designed to cover EADS solution meets all the Air Force specifications. virtually all customer needs from civil and parapublic transport to military and naval attack – while in the field of military aircraft, And as a global company with a worldwide reach and state-of- we can offer not only the most advanced machines, but also the-art products, EADS Business Units can stay close to their integrated logistic support and training simulators. customers, continuously meeting demands and offering tailor- made solutions. Eurocopter, for example, has created a global The military tactical transport aircraft A400M was conceived network of subsidiaries to keep in direct, day-to-day contact not simply as a result of a military specification, but tailored to fit with its individual regional markets. a wide variety of defence requirements, answering the demand for high payload, long range and high cruise speed. 22 EADS 2001 Market Driven


  • Page 25

    Tiger HAP EADS 2001 Market Driven 23


  • Page 26

    From mass-market air travel to the most advanced space systems, EADS is staying ahead of market trends to deliver more of what our customers want in a more cost-effective form. The ongoing success of Airbus has A market opportunity that’s been based on the company’s ability literally out of this world to develop new programmes adapted Satellite-based navigation, positioning and to market demand. accurate timing information is increasingly significant in many sectors of commercial Airbus now offers a complete range of activity – and the market potential is huge. civil aircraft stretching from 100 to more Estimates suggest that over the 20-year than 500 seats in capacity, with a unique period from 2005 (beginning of the degree of interoperability and common deployment phase) the European market servicing requirements. This choice, for satellite user equipment and related combined with the reduced operating Hellas obstacle warning system for services could be worth around costs of Airbus aircraft and their ability helicopters €200 billion. The positioning signals to conform to the strictest environmental available today come from the United and safety standards, is in line with The latest programmes such as the A380, States’ Global Positioning System (GPS) customers’ priorities as confirmed by the the A340-500/-600 and the future military and, to a lesser extent, the Russian Global current slow-down, since it allows airlines A400M are all on track and running Navigation Satellite System (Glonass). to fine-tune their fleet organisation to on schedule. optimise efficiency. 24 EADS 2001 Market Driven


  • Page 27

    The European Union has identified a need for a global navigation service under international civil control, and the result is Galileo, a proposed satellite navigation system. The system will be interoperable with GPS and leveraging position information into other systems extends the benefits of Galileo. For example, the integration of a Galileo receiver into a GSM handset will provide access to a EC130 whole range of personalised ‘position related information services’. Both were designed for military purposes and neither system can provide the quality Galileo is a major opportunity for the Columbus research laboratory for the and reliability of service to meet modern space industry in the widest sense. International Space Station (ISS) demands for safety, efficiency and Through Astrium, with its extensive competitivity: Glonass currently operates experience of satellite navigation, EADS only around half its satellites and the GPS is playing a major role in the design and signal is deliberately and variably development of the system. downgraded according to US strategic imperatives. EADS 2001 Market Driven 25


  • Page 28

    MAKO NH90 Pushing the boundaries of technology and new thinking innovative EADS today is working on some of the most advanced projects These are: in our industry; among them the A380, the Eurofighter, the • Advanced materials, structures and manufacturing for A400M, the Herschel space telescope and the new generation cost-effective production; ram jet air-to-air missile. • Electronics, microelectronics/optronics and microwave technologies to provide integrated, “smart” products; For tomorrow, we have unique resources in our Research and • The physics of flight, propulsion, energy and acoustics, Technology Development activities – which are focused on to aid the production of environmentally friendly aircraft strengthening our core competencies and delivering improved and high performance vehicles; bottom-line benefits for customers. • Systems and related services to create robust intelligent systems which will extend our business opportunities; and A structure that delivers results • Information and software technologies and advanced Operating both through the recently-established EADS Research processes which will address economic and cost issues through and Technology Network (tasked with achieving synergies “virtual product engineering”. throughout the Group) and the Corporate Research Centre, our research activities are currently concentrated on five core The EADS Corporate Research Centre with its national technologies which have been identified as major competitive centres and its Paris central management is increasingly seen strengths. by European Governments and research establishments as a model for international integration which respects national strengths. Research co-operation across Europe and across Group activities is strengthening our ability to deliver the advances in technology that our customers demand. 26 EADS 2001 Innovative


  • Page 29

    ISS EADS 2001 Innovative 27


  • Page 30

    EADS has a unique heritage of innovations – including the first turbine helicopter, the shrouded helicopter tail rotor (Fenestron), the first twin-engined widebody jet airliner, the first fly-by-wire systems for commercial aircraft and military helicopters and the application of lightweight carbon fibre composites in Airbus. And tomorrow is another day . . . Maintaining leadership in research We are now moving to create the EADS Common Research Programme 2002–2004. In the short term, this will allow us to select and refine our portfolio of projects in order to optimise the creation of added value. In 2002, we shall continue to apply our R&T abilities to improving productivity, performance and environmental Aerodynamic study in a wind tunnel compatibility for the benefit of our customers. We will also continue Safeguarding the future Airbus laser welding to take an active role in the International Eurofighter is the most advanced Aerospace Quality Group (IAQG). multi/swing-role combat aircraft for the decades to come. By fully exploiting the Looking further ahead, we see an ever- unique direct voice input (DVI) principle growing demand for improvements in in latest-generation fighter aircraft, the safety in many aerospace product areas, Eurofighter sets new standards in and we shall be following a structured “care-free handling” and an optimum approach, leveraging our considerable human machine interface. intellectual capital, to provide the appropriate technology-based solutions. 28 EADS 2001 Innovative


  • Page 31

    State-of-the-art avionics, the ‘glass The European Herschel Space cockpit’ design, and the latest Observatory, to be launched in 2007, will technologies for electronic self-defence, carry an Astrium-built 3.5-metre-diameter weapon deployment, navigation, system primary mirror, the largest imaging monitoring, and communications/data link telescope ever launched, and will bring ensure a high degree of efficiency. The us closer to understanding how the multiple redundant digital Flight Control earliest stars and galaxies formed System (FCS) in conjunction with two about 13 billion years ago. newly developed high-performance engines safeguard both excellent flight This has been made possible by the use performance and reliability. of silicon carbide (SiC), a highly stable Mars Express with Beagle 2 material which allows the manufacture of Uncovering the secrets very large ultra-lightweight mirrors. It is of the Universe the result of investments made by Astrium Pioneering research and development in joint research and development by Astrium is set to revolutionise space activities carried out with Boostec in telescopes, allowing us to see further than France since 1992. ever into deep space, and into the mists of time. EADS 2001 Innovative 29


  • Page 32

    Business Structure With the streamlined management structure that EADS has set up, the Heads of five operating Divisions – Airbus, Military Transport Aircraft, Aeronautics, Defence and Civil Systems, Space – report directly to the CEOs. Each of the five operating Division Heads is responsible for profit and loss as well as for meeting profitability targets. Airbus Military Transport Aircraft Noël Forgeard Alberto Fernández Executive Committee Airbus EADS CASA The CEOs are supported in their Noël Forgeard (Military Transport Aircraft) operational tasks by an Executive Alberto Fernández Committee made up of the Heads of each operational Division and of the Heads of the three major functions of the Company. Such Executive Committee chaired by the CEOs is made up of 11 members. Members of the Executive Committee Back row Dietrich Russell François Auque Jean-Paul Gut Jean-Louis Thomas Enders Gustav Humbert (left to right) Aeronautics Division Space Division EADS Gergorin Defence and Civil Airbus Chief International Strategic Systems Division Operating Officer Coordination Front row Axel Arendt Rainer Hertrich Philippe Camus Alberto Fernández Noël Forgeard (left to right) Chief Financial Chief Executive Chief Executive Military Transport Airbus President Officer Officer Officer Aircraft Division and Chief Executive Officer 30 EADS 2001 Business Structure


  • Page 33

    Aeronautics Defence & Civil Systems Space Dietrich Russell Thomas Enders François Auque EADS Military Aircraft Systems and Defence Electronics Astrium Antoine Bouvier Aloysius Rauen Stefan Zoller Joseph Kind Evert Dudok Chris Chant Eurocopter EADS Services EADS Launch Vehicles Jean-François Bigay Jacques Vannier Philippe Couillard EADS ATR MBDA EADS CASA Espacio Jean-Michel Léonard Fabrice Brégier Pedro Mendez EADS EFW EADS LFK EADS Space Services Dierk Minke Werner Kaltenegger Ulrich Aderhold EADS Sogerma Services EADS Telecom EADS Sodern Yves Richard Jacques Payer Henri Dugré EADS Socata EADS Cilas Philippe Debrun Jacques Battistella EADS 2001 Business Structure 31


  • Page 34

    Airbus In its first full year as an integrated company, Airbus continued to achieve healthy commercial results. Airbus delivered a record 325 aircraft, captured a 61% share of the global market in terms of order value and strengthened its profitability pre-R&D. At the same time Airbus took immediate actions to preserve cash and margins in the current commercial aviation downturn. • 1,575 aircraft in order book 2001 Results Airbus has been operating effectively on an integrated basis since the beginning of 2001 • 85 firm orders and 12 customers and its results are 100% consolidated in EADS accounts for the first time in 2001. commitments for A380 Mainly due to this consolidation, revenues increased by 38%. On a comparable basis, they increased by 10%. • A380 development programme on track and on budget Airbus delivered a record 325 aircraft – 257 single-aisles and 68 wide-bodied and long-range aircraft, generating revenues of €20.5 billion – making 2001 the first year • A340-500/-600 to enter service in history in which its revenues have exceeded €20 billion. in 2002 This continued healthy commercial result was achieved despite a general economic • A318 readied for test flight slowdown, which deteriorated significantly after 11th September. • ACJ corporate jetliner takes New orders increasing share of its market While the number of units ordered for Airbus was lower than the 2000 peak (520 gross orders), Airbus won – in line with its forecasts – 375 gross orders representing 53% of the market in terms of aircraft units, and an impressive 61% market share in terms of value. Firm orders booked in 2001 comprised 175 A320 family aircraft, 61 A300/A310 widebody twins, 54 long-range A330/A340s and 85 for the future A380. The events of 11th September naturally produced a rapid change that radically affected the airlines. A sharp downturn in air traffic numbers put most of them in a difficult situation. Airbus decided to adopt a very conservative approach and to write off 101 orders from its order book – mostly with airlines in bankruptcy. Airbus A340-600 AIRBUS millions of euros 2001 2000** variation REVENUES 20,549 14,856 + 38% EBIT* 1,655 1,412 + 17% ORDER INTAKE 50,279 34,158 + 47% ORDER BOOK 156,075 104,387 + 50% in number of aircraft 2001 2000 DELIVERIES 325 311 + 5% ORDER BOOK 1,575 1,626 – 3% * pre-goodwill amortisation and exceptionals ** pro forma, excluding Airbus UK 32 EADS 2001 Airbus


  • Page 35

    Noël Forgeard Airbus President and Chief Executive Officer EADS Executive Committee Member EADS Board Member € 20.5bn €156bn revenues order book However the order book of 1,575 aircraft worth €156.1 billion at the end of 2001 is well ahead of the competition for the second year running. This gives Airbus more than five years of production ahead at the expected rate of 2002. On the basis of detailed discussions with individual customers, Airbus expects to deliver approximately 300 aircraft in 2002. Key events of the year Since July 2001, Airbus has been an integrated, stand-alone company with a single management team. This has represented a major step forward for the company, which has focused on getting the organisational structure up and running effectively. Integration is now fully operational, with single reporting lines and an impressive team spirit, Airbus is now a fully-fledged enterprise in its own right. By 2004, Airbus will contribute €350 million to the EADS €600 million additional EBIT target from Merger Integration value creation. Airbus is also actively managing the downturn in the post-September civil aviation market, and has taken company-wide measures to maintain profitability pre-R&D. These include the stabilisation of deliveries at about 300 units, a pause in recruitment (except on the A380 programme) and the implementation of a further number of ongoing cost savings plans. These steps, combined with highly flexible production systems, should allow Airbus to maintain in 2002 production costs per unit, despite the decrease in deliveries. The overall Airbus target is to reduce costs by €600 million per year: €200 million through R&D reductions on non-critical programmes and €400 million in overhead cost savings. Moreover, at a time when customers may require more financing facilities, Airbus has the A318 Assembly line flexibility to make decisions to support its customers on a case-by-case basis. Indeed, for the third consecutive year, Airbus has reduced its customer financial gross exposure despite the increase in deliveries, and now has the flexibility to increase this exposure, if needed, under tight control. EADS 2001 Airbus 33


  • Page 36

    Airbus continued Product Milestones ACJ Increasing demand for flexibility and security are favouring the Airbus Corporate Jetliner (ACJ), of which Airbus has now sold 30 units into a growing market. Uniquely, the ACJ can be converted back to normal commercial format for airline use, and the aircraft is attracting interest from airlines willing to offer high-level corporate service to major customers. A318 In mid January 2002 the 107-seat A318 successfully completed its maiden flight. The A318 is the latest addition to Airbus range, and is designed to serve markets with frequent services on low-density routes. As part of the Airbus 320 family, offering identical conditions of comfort and operation, it allows customers to manage their fleets more flexibly and to optimise load factors. Airbus has firm orders for 114 A318s, which will begin to enter service in 2003. 34 EADS 2001 Airbus


  • Page 37

    Gustav Humbert Executive Vice President Airbus Chief Operating Officer EADS Executive Committee Member A340-500/-600 The A340-500 and -600 are the latest ultra long range, high-capacity additions to Airbus’ portfolio of products. Designed in consultation with airlines around the world, they offer new levels of comfort and refinement as well as lower operating costs and better revenue potential than their competitors. Airbus has firm orders for 62 of these aircraft. Airbus currently has three A340-600 aircraft in flight test, where they have been meeting (and frequently surpassing) expectations. Certification is due in May 2002, and entry into service in June 2002. The first A340-500 flew in February, should be certified in October and is expected to enter service in November 2002. Airbus A320 family A330 and A340 final assembly line EADS 2001 Airbus 35


  • Page 38

    Airbus continued A380 The A380 programme to develop and manufacture the world’s first 555-seat aircraft is running on time and within budget, particularly with reference to the objective of making the first deliveries in first quarter 2006. Total development costs have been held at US$10.7 billion, and the financing is almost entirely in place. Risk-sharing partners have been found for up to US$3.1 billion of non-recurring costs. More than 4,000 people are currently working on the project, and this will rise to a maximum of 6,500 by the middle of 2002. Offices have been built and facilities including the final assembly line sites in Toulouse and Hamburg are under construction. Airbus firmly believes that the civil aviation market will continue to grow strongly in the medium and long term, and is convinced that it will demand this aircraft for its performance. This is confirmed by its customers who placed 85 firm orders during the year (of which 37 came after the events of 11th September), as well as a further 12 commitments which are expected to be turned into orders in 2002. Since the A380 will be the youngest product on the market, Airbus will be able to integrate the latest standards of security. Moreover, it will be delivered at a time when the civil aviation market should have already recovered. 36 EADS 2001 Airbus


  • Page 39

    Above: Airbus A380 A380 interiors Outlook Top Left: A320 family cockpit Downturn in the airline industry notwithstanding, Airbus believes that it is exceptionally Below left: Airbus A318 well-positioned to meet the present and future challenges of the market place. Airbus has a unique range of products, stretching from 107 to 555 seats. Each on its own offers the customer solid advantages of cost and performance; together, they form a family with a high degree of commonality and interoperability, for more efficient fleet operation that can be responsive to market changes. Customers are increasingly focusing on the economy and environmental friendliness of aircraft; and also on these criteria, the Airbus offering is exceptional. Airbus also has a highly efficient work force. More than 45,000 employees are to deliver 300 new aircraft in 2002, as well as continuing to develop three major new programmes, giving Airbus a dramatic advantage over the competition. Staffing arrangements and conditions of employment are flexible. This flexibility, the complete range of Airbus products meeting market requirements, and its robust backlog are key assets for the successful management of the current civil aviation downturn. EADS 2001 Airbus 37


  • Page 40

    Military Transport Aircraft With an exceptional rise in revenues and orders, the Division confirmed its leadership position in the field of medium military transport aircraft, and is preparing for the A400M programme. Aerostructures won considerable business from other important manufacturers. • 8 countries sign up for the A400M The Division recorded revenues of €547 million; an increase of 73% on the previous year. heavy military transport programme This was mainly due to new deliveries of the C-295 and to the conversion of two A310s to VIP configuration for the Spanish Air Force, and was achieved with a small increase in • Contract signed for 8 C-295 for staff (from 3,548 to 3,573). the Polish Air Force and acquisition of 51% in Polish PZL Warszawa Even more impressive was the rise in order intake from €0.5 billion to €1 billion Okecje – with the total order book growing from €0.9 billion at the end of 2000 to €1.3 billion by the end of 2001. This represents more than two years’ production for the Division. • CN-235 ordered for the French Air Force Military Transports Heavy airlifters: A400M • The CN-235 selected as the fixed The inter-governmental Memorandum of Understanding to develop the advanced wing platform for the US Coast A400M military heavy transport aircraft was signed at the Le Bourget Air Show in June Guard’s Deepwater programme 2001, and on 18th December 2001, eight nations signed a contract for the development and production of 196 aircraft – Germany (73), France (50), Spain (27), United Kingdom (25), Turkey (10), Belgium plus Luxembourg (8) and Portugal (3). The contract enforcement is expected this year. The Division will provide technical and industrial logistic support (ILS) leadership on the project – in which EADS has an 89.5% stake (including 100% Airbus consolidation) – as well as being responsible for the final assembly line at San Pablo, near Seville, Spain. Medium Military Transport Aircraft The order for the Polish Air Force signed on 28th August 2001 for eight C-295 aircraft together with product support services was a major step forward in the positioning of this product as the world’s leading new-generation medium military transport. EADS CASA raised its stake in PZL Warszawa Okecje, the main Polish aeronautic company, to 51%, thus increasing the overall industrial presence of EADS in east Europe. A400M MILITARY TRANSPORT AIRCRAFT DIVISION millions of euros 2001 2000** variation REVENUES 547 316 +73% EBIT* 1 (63) – ORDER INTAKE 993 493 +101% ORDER BOOK 1,320 873 +51% * pre-goodwill amortisation and exceptionals ** pro forma 38 EADS 2001 Military Transport Aircraft


  • Page 41

    Alberto Fernández EADS CASA Chief Executive Officer Head of Military Transport Aircraft Division EADS Executive Committee Member € 0.5bn €1.3bn revenues order book The Division´s CN-235 and C-295 have achieved a market share of 71% in year 2001. The first three C-295 aircraft were handed over to the Spanish Air Force, and four CN-235s were delivered under an Industrial Collaboration Programme with Turkey. Mission Aircraft and Derivatives In February 2001, the Division flew for the first time the FITS (Fully Integrated Tactical System) on board a modified CN-235 prototype aircraft. This system, a major innovation for a new generation of Maritime Patrol, ASW (Anti Submarine Warfare) and related mission aircraft, has been of capital importance for the success of the Division. In March, the FITS-equipped C-295 ASW Maritime Patrol aircraft was selected as the winner of the competition for the United Arab Emirates Navy’s Shaheen 1 project. Also relevant is that the CN-235 has been selected as the fixed-wing platform by all three C-295 potential main contractors – Boeing, Lockheed Martin and RAIS (Raytheon Aircraft Integration System) – for the US Coast Guard’s Deepwater maritime patrol programme. Moreover, the FITS system is included in the bids presented by Boeing and Lockheed Martin. This contract is of major importance, for both qualitative and quantitative reasons. Within the A330 Airtanker consortium, the Division has presented a bid to the UK Royal Air Force for the FSTA (Future Strategic Tanker Aircraft). This programme has a huge economic magnitude – around €3 billion for aircraft – and under the PFI (Private Finance Initiative) will provide the Royal Air Force with air refuelling services for 27 years. Mission system FITS (Fully Integrated The Division has also a substantial level of facility in aerostructures for various aircraft Tactical System) manufacturers. Outlook In 2002, we expect to begin development work on the A400M, as well as the selection of the prime contractor for the Deepwater programme. Following a successful 2001, we expect even better results in the coming year, with EBIT continuing to improve and the order book increasing substantially. EADS 2001 Military Transport Aircraft 39


  • Page 42

    Aeronautics Revenues rose by 8% to €5.1billion. Eurocopter consolidated its position as the global market leader in civil helicopters as well as winning key military export orders. Military Aircraft continued development and preparation for the first deliveries of the Eurofighter. Demand for regional and light aircraft remained healthy. And our maintenance and conversion activities continued to make a valuable contribution. • Eurocopter share of the civilian The Aeronautics Division achieved revenues of €5.1 billion with all Business Units market rises to 57% contributing to this increase. New orders at €5.3 billion were strong even after the exceptional year of 2000.The order book stood at a healthy €13.7 billion at the year • Over 500 military helicopters end, covering the next three years’ business activities. Our involvement in three major in order book; major export pan-European defence programmes – the Eurofighter combat aircraft and the Tiger successes for Tiger and NH90 and NH90 military helicopters – and our growing ability to offer comprehensive in 2001 support packages for helicopters, fighters and transport and mission aircraft provide a solid foundation on which to achieve our targeted growth in the defence sector. • ATR Integrated created Eurocopter • A €1.1 billion contract is signed In the civil and parapublic markets, 495 helicopters were delivered worldwide, of which for Eurofighter training aids Eurocopter (the market leader), accounted for 280 – raising its market share from 51% to 57%. This exceptional achievement is the result of Eurocopter’s product policy of continuous improvements to meet customer requirements. Latest addition to the product range during the year was the EC130 light single helicopter, one of the quietest helicopters in the world. Development of the EC145, an extensively modified version of the BK117, progressed well during the year. In 2001, the market for military helicopters amounted to some US$7 billion and Eurocopter captured 25% of the export market for military helicopters. With the deliveries of NH90, Tiger and EC725 programmes, Eurocopter aims to capture about 20% of the market by 2008. Excluding the US, this will represent some 40% of the defence helicopter market. Major developments in the year included the preparations for serial production of Engine maintenance the Tiger 2-seat combat helicopter for the French and German armies. In December, the Australian Government placed an order for 22 Tigers, underlining this machine’s export potential. This €0.7 billion contract will be booked in 2002. AERONAUTICS DIVISION millions of euros 2001 2000** variation REVENUES 5,065 4,704 +8% EBIT* 308 296 +4% ORDER INTAKE 5,315 8,322 – 36% ORDER BOOK 13,722 13,067 +5% * pre-goodwill amortisation and exceptionals. ** pro forma 40 EADS 2001 Aeronautics


  • Page 43

    Dietrich Russell Executive Vice President Head of Aeronautics Division EADS Executive Committee Member € 5.1bn €13.7bn revenues order book The NH90 – a new-generation transport helicopter for Army and Navy, developed in a programme involving France, Germany, Italy and the Netherlands – is also getting ready for serial production, with the first deliveries scheduled for the end of 2004. The NH90 also achieved a major export success worth €0.9 billion in total, with Portugal ordering ten and the Nordic Standard Helicopter Project involving 52 aircraft for Finland, Sweden and Norway, for which part of the order will be booked in 2002. There are currently some 9,000 Eurocopter machines being operated by 2,065 customers in 133 countries. This creates a healthy market for our customer support activities which represented 34% of our revenues in 2001, and whose availability, in turn, makes our aircraft more marketable in both new and second-hand markets. Eurofighter Military Aircraft: Eurofighter Eurofighter is the state-of-the-art, multipurpose combat aircraft for the coming decades as well as an engineering project of key significance for its European partner countries, which have ordered 620 units. EADS, with a 43% stake in the programme, produces middle sections in Germany and starboard wings in Spain for all aircraft and assembles the German and Spanish aircraft. During 2001, we focused on the final assembly and equipping of the first German Instrumented Production Aircraft, which will be delivered in the second half of 2002, and on the first production aircraft for Spain. In April, the contract was signed between the Eurofighter management company and Netma, the customers’ organisation, for the design, production and support of the Eurofighter Aircrew Synthetic Training Aids (ASTA). We are actively marketing the Eurofighter to potential customers in Europe and Asia. Development of the multi-role functions of the aircraft continues and will be integrated in future contract tranches. Tornado and other Fighter Upgrade Programmes In September 2001, a contract for the basic integration programme of avionics for the Tornados of the German and Italian air forces was signed by the Panavia Tornado consortium and Netma. At the same time, we signed a contract for the Royal Air Force’s Tornado upgrades, and are looking to extend this type of service to other Tornado operators. Other upgrade activities are being undertaken for the Hellenic Airforce’s F-4E, the German F-4F, and for the Spanish Air Force’s F-5B and F-18 Hornets. On the basis of this experience we have submitted, together with Lockheed Martin, a proposal for the modernisation of the Egyptian Air Force’s Phantoms. EADS 2001 Aeronautics 41


  • Page 44

    Aeronautics continued The Mako Programme and Future Projects The Mako programme is aimed at developing a next-generation family of high-performance training and light combat aircraft. Thirteen risk and revenue sharing partners have now embarked on the definition phase based on a cooperation agreement with the UAE. In November 2001, six countries mandated Alenia, BAE Systems, Dassault Aviation, EADS and Saab to jointly undertake the European Technology Acquisition Programme (“ETAP”). This programme will identify, develop and evaluate the technologies which will be required for flying weapons systems in the 2020s. Other initiatives included an initial contract to develop a Global Positioning System (GPS)-controlled system for the more accurate targeting of drops from cargo aircraft at high altitudes, and the ground-testing of Autopol (automatic object recognition for police helicopters). Regional Aircraft 2001 saw the full integration of the ATR business in which we hold a 50% interest while our Italian partner Finmeccanica holds the remaining 50%. The new structure will allow us to substantially lower operational and production costs to better meet the needs of the turbo- prop market. We are already seeing benefits with EBIT which turned positive in 2001. 42 EADS 2001 Aeronautics


  • Page 45

    Twenty of the new ATR 42/72–500 family of aircraft were delivered in the course of the year. The down-turn of commercial aircraft business and the events of September 11th affected the turbo-prop aircraft less than the large airliners – being the low-cost alternative on short-haul operations. In addition to new aircraft ATR has also marketed 23 second- hand aircraft during last year and has provided extensive product support to its worldwide fleet of over 600 aircraft with more than 100 customers operating in 65 countries. Light Aircraft EADS Socata increased its revenues by 10% during 2001. This unit’s activity is divided roughly 50/50 between Aerostructure and General Aviation, with the latter growing at a higher rate. The USA accounts for 60% of revenues, and we are developing our distributor network in order to increase penetration in this market where the TBM 700 aircraft has been very successful over the last years. During the year, we signed a significant agreement with Dassault, under which we became a risk-sharing partner in the FNX business jet programme. Maintenance and Conversion Above: Tiger EADS Sogerma Services is initiating a facilities network for aircraft and components maintenance, spanning an area from Bordeaux over the Mediterranean and Gulf regions. Top left: ATR: Close up front view The US business is developed through the Lake Charles maintenance operation facility Bottom left: TBM 700 which was opened in 2000. We strengthened our position as an independent full service provider by establishing partnerships with OEMs (original equipment manufacturers) Top right: Eurofighter assembly line and gaining access to a new generation of products. And we are developing our total component support business for a growing number of customers. EADS Sogerma Services also designs and manufactures cabin interiors at the Rochefort plant. This Business Unit strengthened its military business in the C-130 market, with its capabilities in structural and avionics modernisation. As an example, the ‘Blue Flash’ programme of modernisation and systems upgrade for 40 Mirage fighter aircraft. With the delivery of a first converted Airbus A310-300 in February 2001 and the first flight and certification of the first A300-600 in December 2001, EADS EFW confirmed its ability to convert any widebody Airbus to fully-functional freight specification and offers now all A300/A310 models with an OEM solution as freighter conversion. EADS 2001 Aeronautics 43


  • Page 46

    Defence and Civil Systems 2001 has been a year of intensive integration, restructuring and strategic adaptation – a year of severe market challenges but also of important successes which has provided our businesses with a solid basis for growth and profitability in the years ahead. • MBDA created – the world’s With our unique portfolio of Intelligence, Surveillance, Command and Control Systems, second largest missile systems secure communication networks, missile systems and services we are very well company positioned to address the new demands in the post 11th September security and defence markets. Defence and Civil Systems (DCS) Division recorded revenues of • Strengthening of Systems and €3.3 billion, an increase of 15% compared with 2000 (€2.9 billion). This growth was Defence Electronics activities largely due to new activities in the telecommunications sector. With an order intake of through partnerships and €3.1 billion, our current order book covers business activity for more than two years. contracts, e.g. in the UAV field A corporate structure to match our customers’ requirements • Creation of a dedicated “Services” We have structured Defence and Civil Systems into four business areas in order to unit, concentrating particularly on achieve optimal cost conditions for the anticipated build-up of mass-produced large-scale outsourced government services programmes such as air-to-ground cruise missiles, surface-to-air anti-missile missiles and electronic systems designed for Eurofighter. The four transnational business areas are: • Strengthening of secured telecom business through acquisition of • Missile systems – offering the world’s largest range of tactical missiles within UK encryption leader (Cogent) the newly-created MBDA and EADS LFK. • Systems and Defence Electronics (S&DE) – covering surveillance and reconnaissance systems, command and control systems, radar technology, avionics and electronic warfare products. • EADS Telecom – providing state of the art communication technology for defence and security applications. • EADS Services – supplying test solutions, support and engineering activities for armed forces and government services, acting where required as an operator. This customer-driven approach has already allowed us to achieve transnational synergies and to contribute significantly to the harmonisation of European government purchases. Milas missile DEFENCE AND CIVIL SYSTEMS DIVISION millions of euros 2001 2000** variation REVENUES 3,345 2,909 +15% EBIT* (79) (110) – ORDER INTAKE 3,081 3,857 – 20% ORDER BOOK 9,094 9,722 – 6% * pre-goodwill amortisation and exceptionals. ** pro forma 44 EADS 2001 Defence and Civil Systems


  • Page 47

    Thomas Enders Executive Vice President Head of Defence and Civil Systems Division EADS Executive Committee Member € 3.3bn €9.1bn revenues order book We also anticipate that the new structure will enable us to broaden our markets by establishing transatlantic programmes closely related to NATO’s Defence Capability Initiative, and to meet our profitability objectives in 2002 and beyond. A position of strength in our key markets The integration and reorganisation of our activities has strengthened our competitive position. Not only are we now a truly global player in the field of missile systems; we are also the number three in Europe for systems and defence electronics. We have continued to develop as one of the leaders in secure telecommunications for military and public customers. Our Business Unit dedicated to services has been geared up to meet the increasing demand of our national customers for outsourced military facilities. EADS has recognised from the very beginning the importance of synergies across the various divisions to develop new business opportunities in defence and security, especially for more demanding customers looking for systems solutions. Initiatives have been launched to coordinate and integrate defence and security strategy globally, and across business boundaries. Since 11th September, these have been focusing on homeland security issues (including ballistic missile defence), commercial air transport security – in cooperation with Airbus – and mission aircraft for intelligence and surveillance, all areas where DCS has a key role to play. Missile Systems An important development was the merger in December of Matra BAe Dynamics, Aerospatiale Matra Missiles and the missile activities of Alenia Marconi Systems to form MBDA – the largest tactical missile systems company in Europe, and the second- Rubis (digital radio network system) largest in the world. Through MBDA, we offer a highly competitive product portfolio including critical subsystems such as warheads, seekers, propulsion, proximity fuses and guidance systems. MBDA starts life with annual revenues of nearly €2 billion, a forward order book of approximately €12 billion, customers in 70 countries and 10,000 employees at 12 main sites in Great Britain, France, Italy and the USA. MBDA also has strategic alliances with the German missile industry (including LFK, an EADS and MBDA common company) as well as in Spain, with the creation of a new missile company named Inmize (owned by MBDA, Indra, Izar and EADS CASA). EADS 2001 Defence and Civil Systems 45


  • Page 48

    Defence and Civil Systems continued Systems and Defence Electronics This business was restructured and integrated in June 2001, to focus on four areas: Airborne Systems; Intelligence, Surveillance and Reconnaissance (ISR) Systems; Command, Control, Communication and Intelligence Systems; and Naval and Ground Systems. Additionally, the unit Business Development and International secures S&DE’s competitive position in the global markets. This business now has the critical mass to achieve profitable growth at international level. It has become the key European player in Unmanned Aerial Vehicles (UAVs) covering all types from light tactical to strategic long range, and is working on the EuroHawk in a joint project with Northrop Grumman. Other contracts S&DE has been awarded include core sensor and combat management systems for the German K130 corvette, the Eurofighter Defensive Aids Subsystem (under a €700 million contract) and the Sostar X project to develop a synthetic-aperture radar for NATO’s airborne ground reconnaissance. S&DE’s position in the growth area of naval combat systems was confirmed by the contract as a system integrator for Finland’s Squadron 2000 programme. 46 EADS 2001 Defence and Civil Systems


  • Page 49

    Telecommunications This EADS Telecom Business Unit was created in March 2001, and covers all our activities in the areas of civil and defence telecommunications. The partnership between EADS and Nortel Networks in secured telecommunications has been restructured in EADS Defence and Security Networks (EDSN, owned 59% by EADS and 41% by Nortel). Moreover, the EADS Telecom Business Unit has been enlarged with the transfer of the UK Cogent Defence Systems, the enterprise business activities of Matra Nortel Communications, Dasa Com Networks, the US company Intecom, the French companies Matranet and Sycomore. In the Public Safety field we won major contracts in France, Spain and Mexico with the Tetrapol technology; in the defence market, we were contracted to supply over €120 million of communications equipment to the UK MOD (Cormoran contract). In France, the Rubis network for the Gendarmerie now covers all 97 administrative regions. It is the largest professional digital radio network in the world, based on the Tetrapol technology retained for 59 networks in 28 countries. Above: From information Other successes included a contract with our US partner SAIC to equip the US Army’s to decision combat training centre, and the choice of the Succession/6500 communication system by the University of Rennes, France, as a result of which we shall be setting the largest Top left: AS30 laser telephony network based on Internet Protocol (IP) ever created. Bottom left: Multimode radar TRS-3D Services The Services Business Unit was created in January 2001 to serve the growing global Top right: Eurofighter with Meteor market in functions like infrastructure support and operations, equipment support and training, which are being increasingly outsourced by governments. Our activities are centred on automatic testing, systems engineering, engineering solutions and military and other services. In the domain of outsourced services, we are well positioned in logistics, telecommunication and training for the French, German and Spanish armies. Outlook With a strong order book of €9.1 billion, the positive effects of a reorganised and more efficient business and the transition from development to production of our major programs, the profitability of DCS will increase significantly from 2002 and thereafter. EADS 2001 Defence and Civil Systems 47


  • Page 50

    Space Despite a particularly difficult environment, EADS subsidiaries continued to prove their technical expertise and competitiveness, for a wide range of clients which includes national governments, space agencies in Europe as well as commercial industry customers. • Ariane 4 gains new It testifies to the high quality of the EADS Space Division that in a challenging reliability record environment we were able to maintain our revenue levels close to those of 2000. At €1.3 billion, the order intake for the year was, as anticipated, lower than the €3 billion • Step 3 of the Ariane 5 for 2000, which came from a particularly high number of orders in telecom satellite and programme approved by because of the M51 ballistic missiles development programme. Nevertheless, at the end the ESA Ministerial Conference of the year, the order book covered future activity well into 2003. • Skynet 4 successfully EADS is today the largest space systems manufacturing company in Europe, and the accomplished third largest in the world. • Early 2002: UK MoD decides on Through our subsidiaries Astrium (controlled 75% by EADS and 25% by BAE Systems), Skynet 5, Astrium to supply EADS Launch Vehicles (EADS LV) and our Business Unit EADS CASA Espacio, we satellites design, develop and manufacture satellites, orbital infrastructures, launchers and ballistic missiles. We provide launch services through our shareholdings in Arianespace, Starsem and Eurockot and services related to telecommunications and earth observation satellites through our Business Unit EADS Space Services and through joint ventures. Finally, we are active in the field of optronics and space equipment including earth and star sensors (through EADS Sodern) and laser technologies (through EADS Cilas). During the year, we took steps to strengthen the efficiency of our space activities in order to improve profitability in a difficult market environment characterised by fierce competition and industry overcapacity. Ariane 5 We launched actions driven by: • an improved focus on customer satisfaction • cost reduction by strengthening integration • streamline of functions to improve management efficiency SPACE DIVISION millions of euros 2001 2000** variation REVENUES 2,439 2,535 – 4% EBIT* (222) 67 – ORDER INTAKE 1,327 3,024 – 56% ORDER BOOK 3,796 4,826 – 21% * pre-goodwill amortisation and exceptionals. ** pro forma 48 EADS 2001 Space

  • View More

Get the full picture and Receive alerts on lawsuits, news articles, publications and more!