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MORE LOSSES AT EADS

MORE LOSSES AT EADS

08 Nov 07. EADS (stock exchange symbol: EAD) displayed strong commercial and operational performance of its legacy programmes, but its EBIT* for the first nine months was burdened by charges for new programmes and restructuring. In particular financial consequences of the A400M programme status have led EADS to update its 2007 EBIT* guidance. For the full-year 2007 the Group expects EBIT* to be around break-even.

“It isn’t time to lower our guard. The sliding trajectory of the US Dollar confirms the necessity to implement and to reinforce Power8 with additional measures. This, and the complexity of programmes that will define tomorrow’s competitive position – both technological and contractual – mean we have to keep on fighting: fight for lower costs, fight for optimal execution, and in the case of A400M, fight for proper support from partners and customers alike. There is no way around additional efficiency measures to ensure EADS’ long-term competitiveness,” said EADS CEO Louis Gallois.

“Apart from that, EADS’ Divisions show ongoing improvements in their operational performance and provide strong business fundamentals.”

In the first nine months of 2007, Airbus deliveries increased to 330 aircraft, especially for the A320 Family, and it registered initial savings in the Power8 restructuring programme. In addition, the first delivered A380 started commercial operations with Singapore Airlines on 25 October. Eurocopter successfully ramped up its serial helicopters production and its service business. EADS Astrium benefited from the growing operations in Paradigm services and a raised Ariane 5 production rate. In the Defence & Security
Division the operational improvements came from both Military Air Systems and Defence and Communication Systems.

Revenues were € 27.8bn (9m 2006: €27.5bn), fuelled by higher commercial aircraft deliveries at Airbus (330 units versus 320 compared to the same period of the previous year) and have been further supported by increased volumes at Eurocopter and EADS Astrium.

The slightly positive development in Group revenues was achieved despite a
decrease in A400M revenue recognition (€ -677m) and an unfavourable
US Dollar impact of €-660m.

In the first three quarters of 2007, EADS’ EBIT* (pre goodwill and
exceptionals) dropped to € -343m compared to €1,426m in the same period of the previous year. The EBIT* was strongly burdened by the

Group-wide A400M charge of € 1.37bn (thereof € 1.1bn at Airbus) recorded in the third quarter. The 9-months EBIT* was further weighed down by Power8 restructuring and A350 XWB launch charges at Airbus (all accounted in the first half of 2007). However, during the first nine months of 2007, the Group experienced an ongoing improvement in its underlying legacy programmes’ business performance. An increase in Airbus deliveries and growth in commercial helicopter, space and defence business contributed positively.

EADS registered a Net Loss of € 705m (Net Income 9m 2006: €867m), or a loss per share of € 0.88 (earnings per share 9m 2006: € 1.08). In the first nine months of 2007, self-financed R&D expenses increased to €1,906m (9m 2006: € 1,691m). This reflects Airbus’ continuing aircraft development programmes. Free Cash Flow before customer financing increased to € 216m (9m 2006: € -695m) thanks to an improved cash flow from operations and reduced capital expenditure. Stronger inflows of customer advance payments only partly compensated the build-up of inventories and higher payments made to suppliers. Free Cash Flow including customer financing improved to €159m (9m 2006: € -153 million) as the above described positive impacts were partly offset by a deterioration at customer financing. During the first nine months of 2007, the Net Cash Position grew slightly to € 4.5bn (year-end 2006: € 4.2bn).

EADS achieved an order intake of €82.6bn (9m 2006: € 25.7bn) due to a significant upswing at Airbus (up 374 per

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