EADS favours cash sales, and encourages independent financing by customers, in order to avoid retaining credit or asset risk in relation to delivered products.
However, in order to support product sales, primarily at Airbus and ATR, EADS may agree to participate in the financing of customers, on a case-by-case basis, directly or through guarantees provided to third parties. Dedicated and experienced teams at headquarters and at Airbus and ATR, respectively structure such financing transactions and closely monitor total EADS finance and asset value exposure and its evolution in terms of quality, volume and cash requirements intensity. EADS aims to structure all financing it provides to customers in line with market-standard contractual terms so as to facilitate any subsequent sale or reduction of such exposure.
Figures for 100% Airbus
| in €m | 2003 | 2004 | 2005 | 2006 | 2007 |
| closing rate €-$ | 1.26 | 1.36 | 1.18 | 1.32 | 1.47 |
| Total Gross exposure | 3,822 | 3,348 | 3,218 | 1,399 | 990 |
| of which off-balance sheet | 724 | 604 | 602 | 483 | 398 |
| Estimate value of collateral | (2,229) | (1,916) | (1,819) | (521) | (411) |
| Net exposure | 1,593 | 1,432 | 1,399 | 878 | 579 |
| Provision | (1,593) | (1,432) | (1,399) | (878) | (579) |
| Airbus Net exposure after Provision | 0 | 0 | 0 | 0 | 0 |
Figures for 50 % ATR
| in €m | 2003 | 2004 | 2005 | 2006 | 2007 |
| Total Gross exposure | 403 | 333 | 348 | 295 | 236 |
| of which off-balance sheet | 126 | 46 | 42 | 43 | 42 |
| Estimate value of collateral | (365) | (300) | (314) | (270) | (211) |
| Net exposure | 38 | 33 | 34 | 25 | 25 |
| Provision | (38) | (33) | (34) | (25) | (25) |
| ATR Net exposure after Provision | 0 | 0 | 0 | 0 | 0 |
In determining the amount and terms of a financing transaction, Airbus and ATR take into account the airline’s credit rating as well as risk factors specific to the intended operating environment of the aircraft and its expected future value. Market yields and current banking practices also serve to benchmark the financing terms offered to customers.
Sales financing transactions are generally collateralised by the underlying aircraft. Additionally, Airbus and ATR benefit from protective covenants and from security packages tailored according to the perceived risk and the legal environment of each transaction.
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