AIRBUS - 2019 Financial Statements

2.4 Airbus Performance Notes to the IFRS Consolidated Financial Statements / 2 Segment order backlog 31 December 2019 2018 (In € million) (in %) (In € million) (in %) Airbus 424,082 90 411,659 90 Airbus Helicopters 16,627 3 14,943 3 Airbus Defence and Space 32,263 7 35,316 8 Transversal / Eliminations (1,484) 0 (2,393) (1) Total 471,488 100 459,525 100 As of 31 December 2019, the total backlog represents the aggregate amount of the transaction price allocated to the unsatisfied and partially unsatisfied performance obligations to the Company’s customers. Backlog commitments are relative to the Company’s enforceable contracts with its customers where it is probable that the consideration will be collected. The value of the backlog is measured in accordance with the revenue recognition standard (IFRS 15) implemented as of 1 January 2018. As a result, contractual rebates, engines concessions, and variable considerations are taken into account for measurement. Contracts stipulated in a currency different than the presentation currency are translated to euro using the spot rate as of 31 December 2019 and 2018. Adjustments to the value of the backlog could result from changes in the transaction price. The backlog will mainly be released into revenue over a period of seven years. 2.4 Airbus Performance 11. Revenue and Gross Margin Revenue increased by €+6,771 million to €70,478 million (2018: €63,707 million), mostly at Airbus (€+6,880 million) driven by higher deliveries of 863 aircraft (in 2018: 800 aircraft), and a favourable foreign exchange impact. Revenue by geographical areas based on the location of the customer is as follows: (In € million) 2019 2018 Asia-Pacific 22,625 23,297 Europe 22,591 17,780 North America 12,036 11,144 Middle East 7,053 6,379 Latin America 1,851 1,437 Other countries 4,322 3,670 Total 70,478 63,707 The grossmargin increased by €+1,718million to €10,505million compared to € 8,787 million in 2018, mainly driven by higher deliveries, favourable mix and improved performance at Airbus, partly offset by Airbus Defence and Space performance and provisions recognised on the A400M programme. The gross margin rate increased from 13.8% to 14.9%. In 2019, Airbus has delivered 112 A350 XWB aircraft. New order intakes, cancellations, delivery postponements and other contractual agreements to the end of December 2019 have been reflected in the financial statements. Risks continue to be closely monitored in line with the schedule, aircraft performance and overall cost envelope, as per customer commitments. Despite the progress made, challenges remain with recurring cost convergence. As of 31 December 2018, the Company’s largest A380 operator reviewed its aircraft fleet strategy going forward and concluded it is forced to restructure and reduce its A380 order by 39 aircraft. The Company entered into discussions with the customer in late 2018 which finally resulted in the signature of a head of agreement on 11 February 2019. Without this customer’s A380 order, the Company has no substantial order backlog and no basis to sustain A380 production, despite all sales and marketing efforts in recent years. As a consequence of this decision, deliveries of the A380 will cease in 2022. At year-end 2018, in view of the above, the Company reassessed accordingly the expected market assumptions and the recoverability and depreciation method of specific assets allocated to the A380 programme. As a result, the Company impaired specific A380 assets in the amount of €167 million, 29 Airbus / Financial Statements 2019