Gif2006 a380 Sperl Heinen

8/13/2019 Gif2006 a380 Sperl Heinen

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The A380 Program

Speaker: Mario HeinenA380 / Senior Vice-president

Global Investor Forum

19th & 20th October 2006


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The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is

not responsible for any consequences from using any of the below statements.

Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and otherforward-loo king statements that are based on managements beliefs. These statements reflect the Companys views and assumpti onsas of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in such statements.

When used in this document, words such asanticipate , believe , estimate, expect , may , intend , plan to and project ar eintended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections forimprovements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cashflow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current andfuture markets for the Company products and other trend projections.

This forward looking information is based upon a number of assumptions including without limitation: A ss um pt io n reg ar di ng d em an d Current and future markets for the Companys products and services Internal performance including the ability to successfully integrate EADS activities to control costs and maintain quality Customer f inancing Customer, suppl ier and subcontractor performance or contract negotiat ions Favourableoutcomes of cer tain pending sales campaigns

Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on varietyof factors including without limitation: General economic and labour conditions, including in part icular economic condit ions in Europe and North America, Legal, financial and governmental r isk related to international transactions The Cycl ical nature of some of the Companys businesses Volatil i ty of the market for certain products and services Pr od uc t p er fo rm an ce ri sk s Co ll ec ti ve barga in ing l abourd i spu tes

Factors that result in signif icant and prolonged disruption to air travel world-wide The outcome of pol i t ical and legal processes, including uncertainty regarding government funding of certain programs Consol idation among compet i tors in the aerospace indust ry The cost of developing, and the commercial success of new products Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies Legal proceeding and other economic, poli t ical and technological r isk and uncertaint ies

Addi tion al inf ormat ion r egard ing t hese fac tor s is co ntain ed in t he Comp any s

Safe Harbor Statement

registration document dated 26th April 2006.

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Achievements and 2006 major mi lestones

Static tests completed, Fatigue test specimen at 15.790 flight

cycles.All test benches in operation

Both Rolls Royce and Engine Alliance engines certified

March 26th 2006: MSN 007 Successful Emergency Cabin Evacuation

Trial 853 passengers and 20 crew members in 78 seconds!

7th

May: First Customer Aircraft flown to Hamburg

Early Long Range flights successfully completed with MSN 2

Main airports are prepared to receive the A380

2006: Flight testing will be finalised by end of Oct, followed by Type Board

Meeting Mid November, and

CERTIFICATION MID DECEMBER


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5EF Wing after test start September 2005

A380 Major Structural Testing

Rear End Test/max VTP bending test

Jan 05

ES Ultimate Wing Bending test February 2006

Fatigue Test Specimen (EF)

Test Purpose:

2.5 times Airc raft l ife=47500FC

Oct06: 18,559 FC and C-Inspection

at TC: more than 1 DSG

Major Static Test (ES)

Al l TC tests and al l Residual Strength testscompleted

Rear End Test (RET)

Al l tests completed for TC

DT testing stopped forInspection at 3800 FC

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Successful Evacuation Test26th March 2006, Hamburg

873 occupants873 occupants 853853 passengerspassengers: 538 MD + 315 UD: 538 MD + 315 UD

1818 cabin crewscabin crews and 2 flightand 2 flight crew memberscrew members

EvacuationEvacuation SemiSemi darknessdarkness

50% of50% of doors inoperativedoors inoperative

In 78 SecondsIn 78 Seconds..

MSN 007MSN 007 EvacuationEvacuation TestTest witnessedwitnessed bybyAi rworthiness Author it iesAirworth iness Author it ies(EASA(EASA withwith FAA participation)FAA participation)

EASA and FAA approved 853 as the maximum

passenger seating capacity for the A380-800.

EASA and FAA approved 853 as the maximumEASA and FAA approved 853 as the maximum

passenger seating capacity for the A380passenger seating capacity for the A380--800.800.


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MSN002: Early Long Flights (ELF)4 8 September 2006

4 ELF 7 hours10 hours

12 hours (overnight)

15 hours

474 passengers on each flightpassengers on each flight

Full cabin serviceFull cabin serviceFacility assessmentsFacility assessments

Questionnaires & interviews

Real Life systems check

The quietest, roomiest, lightest cabin in the skyThe quietest, roomiest, lightest cabin in the sky

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A380 flight test statusA380 flight test status October 16thOctober 16th

MSN 001

First Flight: 27 April 05

Hours flow n: 1172

Take-offs: 968

MSN 004

First Flight: 18 Oct 05

Hours flown: 757

Take-offs: 515

MSN 002

First Flight: 03 Nov 05

Hours flown: 230

Take-offs: 59

5 flight test Aircraft, 2247 hours, 1564 take5 flight test A ircraft, 2247 hours, 1564 take--offsoffsAs at 22As at 22ndnd September 2006September 2006

MSN 009

First Flight: 24 Aug 06

Hours flown: 81

Take-offs: 19

MSN 007(In Hamburg for cabin fit)

First Flight: 19th Feb 06

Hours flown: 7

Take-offs: 3


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ToulouseToulouse LeLe BourgetBourget LeLe BourgetBourget

LeLe BourgetBourget TarbesTarbes FrankfurtFrankfurt

SingaporeSingapore Kuala LumpurKuala Lumpur Kuala LumpurKuala Lumpur

BrisbaneBrisbane SydneySydney MelbourneMelbourne SydneySydney DubaiDubaiDubaiDubai

DubaiDubai MedellinMedellin IqaluitIqaluit PointePointe----PitrePitre SingaporeSingapore

London LHRLondon LHRSingaporeSingapore London LHRLondon LHR London LHRLondon LHR BerlinBerlin

ToulouseToulouse ToulouseToulouse

FrankfurtFrankfurt FrankfurtFrankfurt

FrankfurtFrankfurt SingaporeSingapore

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A380: What Ai rline Pilots Say

Compared to the A320, you do

not feel the difference in flight.

Al though muc h bigger than the

A320, the A380 is easy to taxi.

I have been flying all the fly -by-wire types of Airbus. Its the

same situation here with the A380: its very easy to fly these

aircraft because handling characteristics are extremely sim ilar

and its a real family .

The aircraft is much more responsive than anticipated, it does

not feel like a big aircraft. Cockpit innovation and new

technologies are combined well with Airbus cockpit

philosophy . Coming from the A330, you feel at home and thetransition is very easy.

The aircraft, for its size, is extremely manoeuvrable: veryresponsive, easy to fly, very stable. Actually, I would like to take

this plane home and start flying with it immediately.

Please do not change the

handling qualities of this a/c!

The cockpit and flying characteristics are similar, so it is easy

for somebody who has flown an Airbus before to fly this

airplane. I thought that because the A380 is bigger there would

be a lot more lag in the controls, but to m y pleasant surprise it i s

very lively and very stable - its a lovely plane.

The aircraft is very stable but

also very responsive; more

like flying an A320 than an

A340.


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Huge step in technology successfully implemented

Outstanding Handling Qualities confirmed by airline pilots

Excellent take off and landing performance

Noise levels better than commitments

Emissions significant lower than current limits

Cabin comfort (internal noise and vibrations)

setting new industry standards A380 cockpit the quietest in the sky

Proven airport compatibility

Turn Around Time comparable to 747

A380 is technically an excellent aircraft

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Industrial ramp up problems over-shadow technical achievements:

Lower level of section completion versus May 2005 Planning

Related out of sequence work in FAL has led to delays on Electrical

Power On a major milestone in the build process Following Jun06 Communication to all customers a thorough bottom

up and top down review completed by end of Sept06

A380 Industrial Situation : The Facts


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A380 Industrial Situation: Findings

A crucial element, the 3D Digital Mock-up Unit (DMU) used for the

installation of the physical routing and packaging of electrical harnesses is

not at the required level of robustness and finish for the fuselage

sections 13-18 unlike those of the other fuselage sections (11-12 & 15-21)

due to:

to continuous changes of functionality and geometry

lack of strict control and management of changes

the combination of the complexity, the amount of the electrical systems

and equipment and the specificities of the A380 space allocationconstraints

inefficiencies of the processes and tools used

higher degree of offered customisation compared to previous programs

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Complexity of A380 Electr ics

Define electrical

function

Group wires to

harnesses

Place harness

in DMU

Install in aircraft

1,150

electrical

functions

98, 000 wi res

with 40,000

connectors

508,000 items

in the DMU

530 km wires

in every A380!


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15Main Electric/Electronic Bay

The Volume Factor - Nose Fuselage S11-12

Main electronic

Bay below

flight deck

Emergency Electronic

Bay

Number of wires 100 000 530 km of wires bundled into 350 km of cables

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Electrical Systems

Installation

Forward fuselage

Electrical Installation


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17Install wire bundles

Design of Electrical Harness Installation

Define electrical function

Based on final routing model:

- Launch manufacturing ofphysical wire bundles

- Structural support partsinstallation

- Wiring installation drawings

Changes fromdevelopmentprocess andcustomisation

Continuouslyupdate the

digital model for

electricalinstallation

Allocate wires to bundles

Define geometry of harnesses inDMU.Place harnesses into digitalaircraft & cabin model.Design routing

Not brought

to latest

definition

- Number of changes,- Insufficient Tool

Performance

- Early Learning Curve

Installation

Conflicts

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A380 Industrial Situation: The Consequences

Inefficient tools and processes lead to a high number of time consuming

changes

Creating Out of sequence work and Increase in outstanding work

Imposing slow down of industrial flow to increase level of completion

Present process clearly limits ramp up capability

Additional delay of 1 year

Quality and Safety are in no way compromised


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Finalization of

electrical

installation is

the key in order

to start the

station properly

Station 37Station 37

HTP Preparation

Station 41/40Station 41/40

Structural

Station


Wing Movables Instal.

Station 31/30Station 31/30

Structural Completion

Eqt & Powerplant install.

SystemsTesting


Outside

Tests


Production

Flights


A/C Hand li ng

& Defueling


Ai rcr aft

Furnishing


Ai rcr aft

Painting


Cabin

Production

Flights


Customer

Delivery

(EUR & M/E)


A/C Preparat ion

FerryFlight

FerryFlight

TLS

TLS

HAM

HAM

Ferry FlightFerry FlightHAMHAM TTLSLS


VTP Preparation


Customer

Delivery

(Rest of World )

Stations 50/51/52/53Stations 50/51/52/53

Fus. MCA

Preparation

Stations 16Stations 16

VTP Painting Recovery points for harness integration

Final Assembly Line The Bottle Neck

4 aircraft

13 aircraft

Harness installations start here

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A380 Industrial Si tuation : Decisions

Tools & Processes successfully used and proven on other sections will

be applied on front and rear fuselage

Dedicated trans-national team in Toulouse will re-design and adapt the

new DMU tool to sections 13 and 18

This will provide the solid and robust basis for a proper ramping up of

series production.

New Process or iented Organisation Structure implemented in Hamburg:

- Transversal integration fuselages-cabin-systems

- Integrated teams collocated at aircraft

- International electric design plateau

New Program Organisation structure with dedicated skills and resources


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New Organisation : Airbus-Germany

CFSIWave 1 Cabin & CargoWave 1 FAF SectionEngineering

Wave 1

ElectricWave 1 SystemsWave 1

Functional

Integration

Geometrical

Integration

Zone 1-Zone n

EYV LNL

CFSI

Wave 2

Cabin & Cargo

Wave 2

FAF Section

Engineering

Wave 2

Electric

Wave 2

Systems

Wave 2

Customer

Definition

Cabin Architect

Realizer

Freighter

Quality

BFE / SFE Mngt.

Installation

3D/2D

Harnesses &

Kits

Change

Control

HoE

Primary

Structure

Longitudinal

Structure

Mech.Sys.Inst.

Secondary

Structure

MAP

FAL 1

Electric

LNAL

U. Fresenborg

CFS Integrator

LNAI

H. Warnecke (i.PU)

Systems

A. Janke (i. PU)

Cabin & Cargo

BCN

S. Scholz

BC

Progr. Mngt.

Wave 2

LNA2

G. Falk

Progr. Mngt.

Wave 1LNA1

H. Ltjens

LNE

CEWave 1

CE

Wave 2

Chief Engineer

LNER

H. Warnecke

Chief

Engineering

MAP Arbitration

A380 HAM Plant

LNAM

G. Mecke

TBD

A380 Progr amme German y

LNA

R. Fuchs

ES

FAF Sec.E.

LNAE

K. Kalmer

HR

LNAH

J. Kutzim (i. PU)

P

LNAP

R. Hoppe

F

LNAF

N.N.

Q

LNAQ

H.G. Schrader

Processes & Tools

LNAA

A. Carcasses (i. PU)

FAL1

OSW

FAL2

OSW

St.-O.-Ltg.

TLS

MCA

SNZ

OSW

= Reinforcement from

other Programmes

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The Revised Programme Ramp up

This has led to the following programme:

New Planning June06

2006 - 0 22007 - 1 25

2008 - 13 37

2009 - 25 45

2010 - 45 50


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Thank youThank you


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A380 financial update

Andreas SperlAirbus Chief Financial Officer

Global Investor Forum19th & 20th October 2006

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The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is

not responsible for any consequences from using any of the below statements.

Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and otherforward-loo king statements that are based on managements beliefs. These statements reflect the Companys views and assumptionsas of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in such statements.

When used in this document, words such asanticipate , believe , estimate, expect , may , intend , plan to and project ar eintended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections forimprovements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cashflow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current andfuture markets for the Company products and other trend projections.

This forward looking information is based upon a number of assumptions including without limitation: As su mp ti on r eg ar di ng d em an d Current and future markets for the Companys products and services Internal performance including the ability to successfully integrate EADS activities to control costs and maintain quality Customer f inancing Customer, suppl ier and subcontractor performance or contract negotiat ions Favourableoutcomes of cer tain pending sales campaigns

Forward looking statements are subject to uncertainty and actualfuture results and trends may differ materially depending on varietyof factors including without limitation: General economic and labour conditions, including in part icular economic conditions in Europe and North America, Legal, financial and governmental r isk related to international transactions The Cycl ical nature of some of the Companys businesses Volat i li ty of the market for cer tain products and services Pr od uc t p er fo rm an ce ri sk s Co ll ec ti ve barga in ing l abourd i spu tes

Factors that result in signif icant and prolonged disruption to air travel world-wide The outcome of pol i t ical and legal processes, including uncertainty regarding government funding of certain programs Consol idation among compet i tors in the aerospace indust ry The cost of developing, and the commercial success of new products Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies Legal proceeding and other economic, poli t ical and technological r isk and uncertainties

Addi tion al inf ormat ion r egard ing t hese fac tors is co ntai ned in the Com pany s

Safe Harbor Statement

registration document dated 26th April 2006.

4

A380 backlog & market remain robust

159 firm orders & no cancellations as of today

Strong market demand for long term capacity

Competitive economics compared with competition,reinforced by high fuel prices

A380 will be a very efficient aircraft

Product performances confirmed through flight tests

Certification on track for end 2006

A380 profitability

Long term profitability to be viewed over full programme life

Ramp-up disruptions will mainly impact next 5 years

A380 Financial UpdateIntroduction


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84 aircraft to be delivered for period 2006 to 2010 vs 159deliveries planned in the original business plan

75 deliveries postponed beyond 2010

Huge negative impact on EBIT & Cash from 2006 to 2010

A380 New Deliveries Profi le

2

37

50

1

13

45

25

45

25

0

10

20

30

40

50

60

2006 2007 2008 2009 2010

OriginalBusiness Plan

Sept.2006

6

Overall shortfall of 4.8bn for the years 2006 to 2010

compared to the original Business Plan

Delivery volume shortfall: 2.0bn postponed beyond 2010

Gross margin deterioration on 2006/2010 deliveries: 2.8bn

This amount assumes:A large deterioration of unit costs during the ramp-up phase

Contractual obligations with our customers

Provisions for A380 loss-making contracts booked in 2006

Mitigation measures undertaken through power8

EBIT Impact of A380 Delivery Delays


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2006 EBIT and Hedging

A380 negative impact of 1.1bn on 2006 Airbus EBIT: Loss making contracts : - 0.6bn current estimate

Unit cost deterioration + liquidated damages allocated to contracts

/$ Assumption ~ 1.3

Inefficiency on early aircraft : - 0.5bn

Out of sequence work

Modifications to electrical harnesses

Learning curve postponed to wave 2 aircraft

Hedging:

Hedging instruments maturing in 2007/2008 will be used for $exposure on other Programmes ( SA ramp-up )

New hedges are still implemented according to EADS/AIRBUShedging policy for 2009 and beyond

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Cash Impact of A380 Delivery Delays

Overall shortfall of 6.3bn for the years 2006 to 2010

compared to the original business plan

Gross margin shortfall: 4.8bn

Net working capital deterioration: 1.5bn

This amount assumes: postponement of pre-delivery payments linked with delivery delays

working capital requirements linked to additional aircraft productionlead-time

Peak A380 negative net working capital in 2009 : - 3bn

Mitigation measures undertaken through Power8


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0

0,5

1

1,5

2

2,5

2001 2002 2003 2004 2005 e2006 e2007 e2008

A380 R&D + Cap ex in b n

A380 R&D and CapexRamp-down confirmed from 2006 onwards

Note: intangible assets (IAS 38) included for 0.7bn

R&D / Capex (Airbus Share)

11.7bn (cec)

(all variants at completion)

completed

by end

2006

> 80%

> 80% of (R&D + Capex) completed by end 2006 vs 60% end 2004

Additional R&D effort in 2006/07 mainly on electrical design : 0.2bn/0.3bn

Ramp-down closely monitored for maturity at Entry In Service in 2007

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A380 Business Case Sensitivity Analysis

2005 updated Business Case:

IRR outlook: 19%

Breakeven point: 270 a/c

Expected deliveries: 751 a/c

Long term /$ rate : 1.12

2006 updated Business Case:

IRR outlook : 13%

Breakeven outlook: 420 a/c

Expected deliveries: 751 a/c

Long term /$ rate : 1.12 ( outlook )

The main parameters of A380 Business Case have changed significantly

Strong deterioration of IRR reflects the impact of delayed deliveries (-4%)and cost overruns linked to major disruptions in the ramp-up phase (-2%)

With starting reference 2007 notional A380 breakeven is 150 a/c


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Gif2006 a380 Sperl Heinen