ANNUAL REPORT 2017 AIRBUS - Connecting ANNUAL REPORT ANNUAL the skies 2017 Contents /04 /26 Opening Measuring new horizons our results — Interview with the Digital — Interview with Transformation Officer the Chief Financial Officer — Launching Skywise – Data in the sky — K e y g u r e s /10 /32 Sharing Delivering our vision our priorities — Letter from the Chairman of the Board — Commercial Aircraft — Board of Directors — Helicopters — Interview with the Chief Executive Officer — Defence and Space — Executive Committee — Highlights 2017 — Interview with the General Counsel — Share information and the Chief Ethics and Compliance Officer — Responsibility and Sustainability Registration Document Financial Statements Contents Annual Report 2017 - AIRBUS 001 /04 /26 Airbus is forever innovating, Opening Measuring forever progressing, new horizons our results forever challenging the present — Interview with the Digital — Interview with to be ready for the future. Transformation Of cer the Chief Financial Of cer — Launching Skywise – Data in the sky — K e y g u r e s Airbus aspires to be a digital aerospace champion, connecting software, hardware and customer perspectives for maximum insights and opportunities for growth. Connecting /10 /32 Sharing Delivering the skies our vision our priorities — Letter from the Chairman of the Board — Commercial Aircraft — Board of Directors — Helicopters — Interview with the Chief Executive Of cer — Defence and Space — Executive Committee — Highlights 2017 — Interview with the General Counsel — Share information and the Chief Ethics and Compliance Of cer — Responsibility and Sustainability Registration Document Financial Statements 002 Executive summary Executive summary 002 Executive summary Annual Report 2017 - AIRBUS 003 2017 was a defining year for Airbus, with digitalisation taking an increasingly important role in the Company’s development. A strong operational performance led to better-than-expected results, while there was a sharper focus on Responsibility and Sustainability. Executive The Digital Transformation Officer explains how digitalisation /06 is preparing the Company for the future of aerospace. The year saw the launch of Skywise, a pioneering platform that summary gathers data from the Airbus fleet, which airlines leverage to improve /08 their performance. In the words of Denis Ranque, the Chairman, 2017 was a busy year as the Board prepared Airbus /12 for a new era. It was a successful year as the Company overcame operational challenges and set its sights firmly on the future, explains /16 Chief Executive Officer Tom Enders. There was a strong focus on Ethics and Compliance. Guided by John Harrison, General Counsel, Airbus /20 prioritised training to ensure that ethical and compliant behaviour is instinctive throughout the Company. Airbus set out to enhance coordination of Responsibility and Sustainability, and to monitor its impact through key /22 performance indicators. The Company again delivered on its commitments and surpassed its targets for the year, explains /28 Chief Financial Officer Harald Wilhelm. Commercial Aircraft exceeded its targets for 2017. /34 Deliveries reached record levels. Helicopters performed well in a challenging market, /36 boosted by the competitiveness of its portfolio. Defence and Space received healthy orders for military aircraft, /38 while its reported performance reflected the portfolio reshaping. Ultimately it was a positive year /42 for the Airbus share price. 004 Chapter 1 / 06 Interview with Marc Fontaine, Digital Transformation Officer / 08 Launching Skywise – Data in the sky Annual Report 2017 - AIRBUS 005 Opening new horizons A350 XWB 006 Interview with Marc Fontaine, Digital Transformation Officer “Unlocking the potential of data will do nothing short of revolutionise the aerospace industry. By digitally closing the entire loop – from aircraft design to in-service support, by connecting the entire aerospace value chain, we can resolutely achieve superior process and product efficiency. By embracing new digital capabilities with pragmatism and ambition, Airbus will remain at the forefront of aviation innovation.” MARC FONTAINE Digital Transformation Officer The iflyA380 augmented reality app How is Airbus approaching its What tangible results have digital transformation? you achieved so far? At Airbus, we are huge believers in the We have made the greatest progress in vast potential that a digital transformation analytics and big data. In the digital age, data of the aerospace industry can bring. This is the fuel that powers thriving businesses. is why since 2015 we have been relentless At the beginning of 2017, we started with a about exploring the power of digital data lake, populating it with as much data as technologies to improve our operational we could and delivering the first internal ben- and product performance, our employees’ efits, mostly in support of the A350 industrial workplace and to increase revenues ramp-up. By the end of the year, we had ten and profits. times the original number of users and sev- eral airlines signed up. This is because they We have based our digital strategy around see the value it can generate, from the shop bridge the gap between physical and digital developing key technologies that will help floor to aircraft operations. reality and therefore substantially enhance us to achieve these goals. These range from efficiency and reduce problems with qual- advanced analytics and big data through And because we understand how much ity. Proofs of concept have demonstrated to the “Internet of Things” (IoT), virtual and more can be done with full data access, we concrete value, and we are now working augmented reality, artificial intelligence, have introduced an enhanced way to col- on industrialising them in a pilot connected additive manufacturing and robotics. lect this data from aircraft through a flight factory. operations and maintenance exchanger, or In addition to maturing and implement- FOMAX for short. The solution enables us We’ve equally made headway with virtual, ing these new capabilities at scale, we are to go from 400 to 24,000 data parameters augmented and mixed reality, applying these focused on updating and simplifying our IT gathered on every single flight. All of this data technologies across the business. Our backbone to make sure we have the appro- forms the basis of our Skywise data platform engineers are able to view 3D digital aircraft priate digital foundations upon which to grow for the aerospace industry. models from any angle using virtual reality a modern business system landscape. This headsets to quickly review accessibility, also means equipping all our employees with We also demonstrated the benefits IoT maintenance processes or simply test a the right IT solutions and devices to help can bring to manufacturing and started to new design. We are also using augmented them be more efficient and ensure a higher scale it up. By digitally connecting different reality glasses for hands-free guidance in contribution to their everyday activities. objects such as machines and parts, IoT can production, making installation operations Annual Report 2017 - AIRBUS 007 promising innovation and digital concepts. Our Skywise data platform is the most mature solution. It continued to gain ground at the beginning of 2018 when AirAsia Group’s A320 and A330 fleets signed up for predictive maintenance services powered by Skywise – and we will extend its offering to our helicopters, military aircraft and other products. We will also continue to work on creating a digital thread thanks to a modern connected tool suite – following an aircraft from design through to production, in-service and ultimately the scrapyard. From this we expect major breakthroughs in efficiency, both in development cycles and cost reduction but also on the manufacturing recurring costs of each aircraft and its serviceability. Airbus is applying technologies like virtual reality across the business At the same time, we will take great care to upskill our workforce. We are currently training employees across business func- tions, for example, in basic data analytics. We are also hiring advanced data scien- Airbus is embracing 3D digital modelling tists, systems architects, cyber security experts and other specialists who can help us to solve advanced data and hardware problems. We will also set up a more am- bitious change programme to embark and accompany our employees in this digital transformation. Finally, as we collect more data, cyber and industrial security becomes ever more important. This is and will remain a major priority and enabler. How will this transform Airbus? Unlocking the potential of data will do nothing short of revolutionise the aerospace industry. By digitally closing the entire loop – from aircraft design to in-service support, by connecting the entire aerospace value chain, quicker, enriched and more comfortable for iflyA380 app with an augmented reality fea- we can resolutely achieve superior process employees. These technologies also offer ture among the new options. We are using and product efficiency. We have the ambition great potential for training and maintenance it to experiment with new business models of zero defects and operational interruptions solutions for customers, as demonstrated by and to connect with passengers. As well as while enriching the role of our people. the prototype developed with Japan Airlines allowing passengers to choose to fly on the and JAL Engineering. A380