AIRBUS - 2019 Financial Statements

2.7 Capital Structure and Financial Instruments Notes to the IFRS Consolidated Financial Statements / – Level 3: inputs for the asset or liability that are not based on observable market data – fair values measured based on Level 3 input rely to a significant extent on estimates derived from the Company’s own data and may require the use of assumptions that are inherently judgemental and involve various limitations. The fair values disclosed for financial instruments accounted for at amortised cost reflect Level 2 input. Otherwise, the Company determines mostly fair values based on Level 1 and Level 2 inputs and to a lesser extent on Level 3 input. The following table presents the carrying amounts of the financial instruments held for the three levels of the fair value hierarchy as of 31 December 2019 and 2018, respectively: (In € million) 2019 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets measured at fair value Equity instruments 1,988 0 528 2,516 1,778 0 489 2,267 Derivative instruments 0 1,224 216 1,440 0 1,152 165 1,317 Securities (1) 13,368 0 0 13,368 12,794 0 0 12,794 Customer financing 0 0 350 350 0 0 510 510 Cash equivalents 7,014 652 0 7,666 6,576 984 0 7,560 Total 22,370 1,876 1,094 25,340 21,148 2,136 1,164 24,448 Financial liabilities measured at fair value Derivative instruments 0 (3,974) (20) (3,994) 0 (2,729) (26) (2,755) Other financial liabilities 0 0 (1,014) (1,014) 0 0 (2,300) (2,300) Total 0 (3,974) (1,034) (5,008) 0 (2,729) (2,326) (5,055) (1) Reclassified from Level 2 to Level 1. The development of financial instruments of Level 3 is as follows: (In € million) Derivatives Participations Customer financing Total Written put options on NCI interests Commodity swap agreements Total Balance at 1 January 2018 0 478 770 1,248 0 (3) (3) Business combination 198 0 0 198 (2,247) 0 (2,247) Profit or loss 25 0 (260) (235) 0 (67) (67) Equity 0 23 0 23 0 0 0 Settlements (58) (12) 0 (70) 0 44 44 Release 0 0 0 0 (53) 0 (53) Balance at 31 December 2018 165 489 510 1,164 (2,300) (26) (2,326) Business combination 0 0 0 0 0 0 0 Profit or loss 51 0 (160) (109) 0 (12) (12) Equity 0 39 0 39 1,286 0 1,286 Settlements 0 0 0 0 0 18 18 Others 0 0 0 0 0 0 0 Balance at 31 December 2019 216 528 350 1,094 (1,014) (20) (1,034) The financial liabilities measured at fair value and classified as Level 3 consist mainly of the written put options on non- controlling interests (“NCI puts”) relating to ACLP (see “—Note 7: Acquisitions and Disposals”). The fair value of these NCI puts are derived from a discounted cash flow analysis using the latest operating plan and a projection over the life-time of the A220 programme. In addition a post-tax WACC of 7.5% is used to discount the forecasted cash flows, taking into account the specificities of the programme (2018: 6.95%). The decrease in the fair value of the NCI puts reflects the latest projections on funding needs, ramp-up phasing and market projections. 72 Airbus / Financial Statements 2019