Dear Shareholders,
Crisis, recession, crash. All of these emotive words currently appearing in the headlines frighten and lead to doubts about the resilience of the economy in general and that of companies in particular. EADS is of course not immune to the financial market shake up. We are aware that the economic crisis will affect us, our customers and our suppliers. First signs are tangible in the airline sector: airlines faced a reduction of the volume of air traffic in September for the first time since 2003. They are affected by the scarcity and increasing cost of funding. A reduction in aircraft orders can be expected, together with an increasing need for customer funding. Despite this volatile market environment, the Group continued to show robust underlying performance.
The first element helping the Group’s stability is the order book worth 400 billion euros. Its record level gives us far-reaching visibility. The second element is our remarkable financial health. We hold 9 billion euros in net cash with an additional un-drawn credit facility of 3 billion euros that we can release at our convenience and with no restrictions. It is also worth noting that customer financing is currently at its lowest level for the last 20 years. Quite apart from our own strengths, over the last few weeks we have benefited from a strengthening of the dollar which, although it does not remove the exposure to Dollar fluctuation on the Group’s profitability, does ease the pressure.
In response to these uncertainties, we have paused the single aisle ramp-up at Airbus and our liquid resources will allow us to provide financial assistance for our customers on a discretionary basis. Finally, and thanks to Power8, we have already launched a certain number of initiatives with a view to ensuring the Group’s competitiveness. We are reaping the first benefits now but, in spite of the increased value of the Dollar, we must continue our effort in order to reduce our vulnerability to the Dollar volatility. This and the potential impact of the crisis are why we are going to take additional measures in the context of the Power8 plus plan. At the same time, we are not forgetting our own internal difficulties. The A400M programme raises many questions while increasing output rates for the A380 remains at the forefront of our efforts.
Our order book strength, strong cash flow generation and solid balance sheet position provide tangible reasons to believe we are well prepared to face the unstable economic climate.
HANS PETER RING
Chief Financial Officer
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