Airbus is one of the world’s two leading suppliers of commercial aircraft of more than 100 seats. Since it was founded in 1970 up to the end of 2006, Airbus has received orders for 7,097 aircraft from approximately 250 customers around the world. Its market share of annual deliveries worldwide has grown from 15% in 1990 to 52% in 2006. In 2006, the Airbus Division of EADS generated revenues of €25.2 billion, representing 63.9% of EADS’ total revenues.

With 434 aircraft deliveries in 2006 (378 in 2005), Airbus was once again the largest supplier of commercial aircraft in the world, surpassing its main rival for the fourth consecutive year. Airbus received 824 gross orders in 2006 (compared to the industry record of 1,111 gross orders set by Airbus in 2005). After accounting for cancellations, net order intake for 2006 was 790 aircraft (compared to 1,055 aircraft in 2005). At 31^st December 2006, Airbus’ backlog of orders (2,533 aircraft) stood at 79.9% of total EADS worldwide backlog.

Nonetheless, 2006 proved a challenging year for Airbus, due primarily to the difficulties it encountered in the installation of electrical harnesses for the A380. These difficulties led it to twice revise its delivery schedule for the A380 during 2006, to the disappointment of its customers. In particular, FedEx cancelled its order for the freighter version of the A380, the A380F, as a result of the delivery delays. More recently, UPS announced that it too would cancel its order for the A380F following Airbus’ announcement that development of the A380F had been rescheduled. See “Recent Developments”. From a financial perspective, the delay in A380 production had a negative effect on Airbus’ earnings before interest and taxes, pre-goodwill impairment and exceptionals (“EBIT*”) of €2.5 billion in 2006. See “Part 1/Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

In response to customer recommendations, Airbus also redesigned its originally proposed A350 aircraft during 2006. In July 2006, it presented technical specifications for a revised aircraft family, the A350XWB (Xtra Wide Body). In December 2006, Airbus formally launched the A350XWB series and discontinued the original A350 programme. The A350XWB series will accommodate between 270 to 350 passengers and is expected to enter service in 2013.

In order to meet its future investment needs related to development of the A350XWB and to address other challenges, Airbus announced the implementation of the Power8 programme on 28 February 2007, as discussed below.

Airbus S.A.S. has been a wholly-owned subsidiary of EADS since the purchase of BAE Systems’ 20% stake in October 2006. See “Organisation of Airbus”.