DaimlerChrysler sells part of its stake in EADS to investor consortium⁽²⁾

On 9^th February 2007, DaimlerChrysler reached an agreement with a consortium of private and public-sector investors pursuant to which it will effectively reduce its shareholding in EADS from 22.5% to 15%, while maintaining the balance of voting rights between German and French controlling shareholders.

DaimlerChrysler has placed its entire 22.5% equity interest in EADS into a new company, in which the consortium of investors will acquire a one-third interest through a special-purpose entity. This effectively represents a 7.5% stake in EADS. The transaction will be executed in the first quarter of 2007. As compensation for the indirect ownership of EADS shares, the investors will receive from DaimlerChrysler a preference dividend on the 7.5% indirect investment of 175% of the normal EADS dividend.

DaimlerChrysler has the option of dissolving the new structure on 1^st July 2010 at the earliest. If the structure is dissolved, DaimlerChrysler has the right either to provide the investors with EADS shares or to pay cash compensation. If EADS shares are provided, the German State, the French State and Lagardère through SOGEADE, will be entitled to pre-empt such EADS shares to retain the balance between the German and the French side.

DaimlerChrysler will continue to control the voting rights of the entire 22.5% package of EADS shares.

This transaction constitutes a specific exception to the agreements described in section "Relationships with Principal Shareholders".

Airbus strengthens its competitiveness through Power8

In order to address the challenges posed by US dollar weakness, increased competitive pressure and the financial burden related to the A380 delays, and to meet its other future investment needs, Airbus has announced the implementation of the Power8 programme. Power8 provides for strong cost-cutting measures and aims at transformation of the Airbus business model and the development of a global network of partners. It is intended to allow Airbus to devote its resources to core activities and eliminate inefficiencies within its current structure. The programme aims at the full industrial integration of Airbus by establishing a new industrial organisation with transnational centres of excellence replacing the existing national structures. This transformation will occur progressively over several years and includes the further expansion of Airbus’ global footprint.

As part of Power8, Airbus management will implement cost reduction and cash generating efforts with the goal of achieving EBIT* contributions of €2.1 billion from 2010 onwards and an additional €5 billion of cumulative cash flow from 2007 to 2010. A large part of the cost savings is expected to be realised through the reduction of Airbus’ headcount (including temporary and on-site subcontractors) by 10,000 employees. The planned measures to reduce overhead costs, and specifically headcount, will require a provision of €680 million to be recorded in the first quarter of 2007.

In addition to headcount reduction, Airbus will also attempt to focus more on its core business activities in the future. These activities include overall aircraft and cabin architecture, systems integration, as well as the design, assembly, installation, equipping, customization and testing of major and complex components or manufacturing of new technology parts. Accordingly, Airbus is considering industrial partnerships at its plants in Filton, Meaulte and Nordenham, in order to facilitate their transition from metallic to composite design and manufacturing technology. With respect to its sites in Laupheim, St. Nazaire-Ville and Varel, Airbus will consider several options, including their sale to key suppliers, management buy-outs or combinations with nearby sites.

A number of measures are also being implemented to further increase the efficiency of the final assembly lines (FALs) pursuant to Power8. The A350XWB will be assembled and receive its interior furnishing in Toulouse, in the same facilities as the current A330/A340, enabling a capacity enhancement of this FAL. A third A320 Family FAL will be set up in Hamburg immediately to cope with the steep production ramp-up currently under way. This FAL will be established in already existing facilities and will have full type flexibility when demand for A320s exceeds rate 14 per month. The A320 will continue to be assembled in Toulouse up to rate 14. Hamburg will also perform final assembly of the future New Single Aisle family. Furthermore, in order to allow parts to be fitted in the most logical place to optimize the overall cycle time, some upstream preparatory A320 and A380 cabin installation work will be transferred from Hamburg to Toulouse. Cabin installation will remain in Hamburg. A380 deliveries will still be made from both Hamburg and Toulouse.

Finally, Airbus will introduce a fully integrated and transnational organisation to support the implementation of Power8 and the establishment of the new business model. The new industrial organisation will seek to streamline processes through the establishment of four truly transnational “centres of excellence” led by the Head of Operations: Fuselage & Cabin, Wing & Pylon, Rear, and Aerostructure, the latter being in charge of fuselage subassembly and interior furnishing activities. This will replace the current organisation of eight nationally structured centres of excellence. Further organisational changes include completing the integration of support functions such as Finance and HR as well as reinforcing the authority of core functions such as Engineering, Procurement and Programmes.

Finnair, First Airline To Sign Firm Contract For the A350XWB

On 8^th March 2007, Finnair signed a firm contract for eleven A350XWBs, as well as seven additional long-range aircraft (a mix of A340-300s and A330s). It is the first airline to convert its order for nine of the initial A350 aircraft, placed in December 2005, into the new A350XWB, and to simultaneously increase the number of aircraft ordered.

Eurocopter wins 112 orders at Heli-Expo 2007

Eurocopter won a record 112 orders at Heli-Expo 2007, including 88 firm orders and 24 options Heli-Expo 2007 is an exhibition dedicated to helicopters which took place in Orlando from 1 – 3 March 2007. The majority of the new orders came from North American clients.

A380F development frozen

On 2^nd March 2007, UPS announced its intent to cancel its order for 10 A380 freighters. In connection with this announcement, Airbus decided to reschedule development of the freighter version of the A380 and redeploy existing resources towards production of the passenger version of the aircraft.

UAE selects EADS for its Air Tanker programme

On 21^st February 2007, the UAE (United Arabic Emirates) Armed Forces signed a Memorandum of Understanding with EADS for the procurement of the A330 MRTT as the new air-to-air refuelling aircraft for its UAE Air Force & Air Defense. The expected order will be for three A330 MRTT aircraft which are scheduled to be delivered from 2011 onwards.

Arianespace and Astrium Space Transportation have decided to increase the Ariane 5 production rate

On 15^th February 2007, Arianespace and Astrium Space Transportation signed an agreement to undertake the investments needed to supply seven Ariane 5 ECA launchers per year beginning in February 2008 By increasing the production rate, Arianespace will attempt to keep pace with growing demand in the launch services market, in which Arianespace plays a leading role with a market share of more than 50%.

EADS sells stake in Embraer

On 14^th February 2007, EADS sold its 2.12 percent stake in Embraer. Before taxes and bank fees, EADS received total proceeds of €124 million. Following changes in the shareholder structure of Embraer, EADS’ stake had become a purely financial investment. The sale of its stake in Embraer will not prevent EADS from further exploring areas of industrial cooperation with Embraer in the future.

EADS and Russian UAC further develop cooperation

On 22^nd March 2007, EADS and Russia’s United Aircraft Corporation (UAC) announced that they had signed four agreements which further specify cooperation programmes under discussion between the partners. The agreements are based on the findings of a top-level working group which has been set up end of last year.

The first agreement covers the partnership in the Airbus A350XWB programme. Airbus is offering a five percent airframe participation to the Russian industry. The discussions about which components of the aircraft will be designed and built in Russia are still ongoing.

The second agreement provides for the establishment of a joint venture located in Dresden, which will have the task of setting up freighter conversion centres for the Airbus A320 Family at Lukhovitsy near Moscow in Russia and the German site.

The third agreement foresees a joint study of the transport aircraft market and possible cooperation between EADS and the Russian industry in this field.

The fourth agreement defines a shareholder change in the Engineering Centre Airbus Russia (ECAR): UAC will purchase the Kaskol Group shareholding.