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EADS REPORTS STRONG PERFORMANCE ACROSS THE BOARD

August 1, 2008 by

EADS REPORTS STRONG PERFORMANCE ACROSS THE BOARD

30 Jul 08. EADS (stock exchange symbol: EAD) continued its robust underlying performance in the first half of 2008 and achieved significant efficiency improvements across all Divisions despite programme challenges the Group is still facing. Within an uncertain macro-economic environment EADS registered a remarkable order intake reflecting the quality of its commercial and defence product portfolio. The Group confirms its
full-year 2008 EBIT* guidance of € 1.8bn in spite of an A380 charge.

“EADS is delivering strong results. Our order book is at a record level as our products and our technologies are outstanding. The recent Farnborough air show proved this impressively. In the commercial market our fuel and eco-efficient range of excellent products meets the core of customers’ demand. In terms of economic performance we are progressing thanks to far- reaching efforts involving all five Divisions,” said EADS CEO Louis Gallois.

“To maintain competitiveness, EADS has to tackle the ongoing US dollar weakness. Beyond the successfully running Power8 initiative we are launching Power8 Plus aiming at an additional € 1 billion savings and efficiency improvement in the years following 2010.”

Airbus continued to ramp-up deliveries and handed over 245 aircraft
(H1 2007: 231 aircraft) to its customers. Just recently, Emirates became the second operator of the A380, receiving its first aircraft from the delivery centre in Hamburg. The Military Transport Aircraft Division rolled out the first A400M from the final assembly line in Seville; first flight is expected in autumn. Eurocopter registered a strong order intake bringing its order book to a record high. Astrium made substantial progress in completing the military satellite communication system Skynet 5. The Defence & Security Division expanded its secure communications business and forged ahead in its Unmanned Aerial Vehicle (UAV) activities.

Revenues increased by 8 percent to € 19.7bn (H1 2007: € 18.4bn) reflecting growth across all five Divisions despite a negative US dollar headwind. Higher Airbus deliveries (245 units, including four A380s, compared to 231 aircraft in the same period of 2007), increased volumes at Eurocopter, Astrium and Defence & Security and an A400M milestone
achievement demonstrate the strong commercial momentum in the first half of 2008.

EADS’ EBIT* (pre goodwill and exceptionals) for the first half of 2008
reached € 1.16bn compared to € 358m in the first half of 2007, when Airbus’ EBIT* in particular was heavily burdened by Power8 restructuring provisions and A350 launch charges. The growth resulted from improvements across all Divisions. At Airbus, strong operational performance and achievement of Power8 cost savings were partly offset by a €715m charge in the context of the A380 programme review announced in May.

Nevertheless, in the first six months of 2008, Group EBIT* benefited from under-proportional R&D expenses but this benefit will reverse in the second half of the year. In the first six months of 2008 a negative US dollar impact of around €700m led to loss-making contract adjustments and put pressure on the Group’s EBIT*. Deterioration of hedge rates was compensated by temporary excess volume of matured hedges.

In line with the Group’s EBIT* development, EADS improved its Net Income to €403m (H1 2007: €71m), or earnings per share of € 0.50 (earnings per share H1 2007: € 0.09). To further address the weak US dollar and to secure future profitability, EADS is taking decisive actions with regard to its hedging activities. The Group started to complement its hedging positions buying a significant amount of US dollar options.

Self-financed R&D expenses decreased slightly to €1,130m (H1 2007:
€ 1,266m), but are expected to grow over the full year mainly in the context of Airbus’ aircraft development programmes, especially for the A350.

Free Cash Flow before cus

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