Creation of Airbus SAS positively impacts EADS consolidated financials
Amsterdam, le 12 juillet 2001
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Value creation generated by Airbus: EUR 350 million per year by 2004
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Airbus 100% consolidated in EADS balance sheet
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Airbus SAS creation to enhance EBIT margin for EADS shareholders beginning in 2002
The creation of the integrated company Airbus SAS (Société par actions simplifiée) will have a positive impact on the consolidated financials of EADS European Aeronautic Defence and Space Company. EADS and BAE Systems announced the conclusion of the integrated Airbus company's formation on 12 July.
As previously released by EADS, Airbus SAS will generate EUR 350 million in recurring annual synergies by 2004. Of this amount, EUR 100 million are attributable to the creation of Airbus SAS itself, while EUR 250 million are derived from the foundation of EADS, primarily in the form of purchasing synergies, single-management efficiency, and R&D optimisation. Management has already implemented detailed plans, and Airbus is expected to deliver around 10% of the total value creation target in 2001. Organised around a lean management structure, Airbus is headquartered in Toulouse, France. It has been operating effectively on an integrated basis since 1 January, 2001.
As of 1 January 2001, Airbus has been consolidated 100% within EADS. The new Airbus company will be held 80% by EADS and 20% by BAE Systems. With the exception of a very limited number of specific issues, requiring unanimous approval, all decisions are carried by simple majority. Both shareholders have agreed that the hedging and cash management functions will be undertaken by the EADS corporate finance function.
The main accounting impact (not yet audited) of this transaction:
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Airbus UK as well as the 20% participation of BAE Systems in Airbus GIE are transferred to EADS. In exchange for the contribution of Airbus UK, which is accounted for at fair value, EADS is "selling" 20% of the new Airbus company to BAE Systems, generating an extraordinary non-cash and non-taxable profit in 2001.
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The key financial impacts of these transactions include an additional goodwill of about EUR 4 billion, fair value adjustments of approximately EUR 0.5 billion, and an extraordinary profit of nearly EUR 2 billion (pre-goodwill amortization).
The Airbus consolidation has already been incorporated in the EADS management forecast, which specifies an increase in EBIT (pre-goodwill and exceptional) of 15% in 2001, while revenues are expected to increase by 20%. From 2002 onwards, Airbus consolidation is expected to positively enhance the EBIT margin for benefit of EADS shareholders.
On 30 June 2001, Airbus employs a staff of more than 44,000. The Airbus order book includes 1,714 aircraft. Airbus expects to deliver around 330 aircraft and to book 350 to 400 new aircraft orders in 2001.
Contact:
Eckhard Zanger
EADS Communications Finance
Tel. +49 89 607 27961
