It is a pleasure for me to address you as the CEO of EADS. I am truly honoured to stand at the helm of such a great company, at a time of crucial significance to its future.

2007 was a year of contrasts. EADS achieved tremendous commercial success: the company doubled its order intake to a record of € 137 billion, pushing our order backlog to the historical level of € 340 billion. The very robust market demand propelled Airbus to new heights, while Defence & Security and Eurocopter also experienced a remarkable increase in their order intake.

Astrium again proved the outstanding reliability of its technology, with 22 successful Ariane 5 launches in a row. We can be proud of last year’s industrial achievements: thanks to the talent and dedication of all our employees, we were able to ramp up deliveries of our legacy programmes seamlessly to a record output. Three A380 have entered into service to date. The Company is reestablishing control over its most complex operations.

Our underlying business performed well in revenues and profits, and the free cash flow, worth € 3.5 billion, was undoubtedly exceptional. Nonetheless, last year’s financial results are undeniably disappointing, with a weak EBIT of € 52 million and a Net Loss of € 446 million. It is the costs associated with specific issues, the A380 and A350 XWB programmes, the A400M delay and the restructuring provision for the Power8 programme, that dragged our performance down. The ever falling dollar also contributed to undermine our financial results and remains a threat for the future, calling for decisive action.

Therefore, key decisions were taken last year in order to restructure Airbus, allowing a transformation around the core differentiating capabilities of the company. The ongoing divestment of sites is intended to reduce capital intensity, and the cost saving efforts of the Power8 programme were more successful than forecast for 2007.

In 2008, as indicated by our EBIT guidance, our results will be significantly improved. We will achieve this through programme management excellence, operational improvements and high quality R&D. We also have to protect ourselves from the dollar threat: very shortly, the Power8 programme will be supplemented with additional cost saving measures. In the long run, we will have to keep on increasing our industrial footprint in the dollar zone, as part of our strategy to become a more global company, and seek a more ambitious economic performance in terms of return on sales and return on invested capital.

Many challenges still await us in 2008. Concerns over a potential slowdown of the American economy have clouded market anticipations, and some observers have also questioned the robustness of the aircraft market. Nevertheless, we have reasons to stay confident and optimistic: emerging markets, certain low cost carriers and leasing companies should remain persistent drivers of our civil aircraft business. In the defence area, the U.S. Air Force chose the Northrop Grumman KC-45A refuelling tanker, based on the Airbus A330, which is a major strategic breakthrough opening up new perspectives. And the U.K. Ministry of Defence also contracted EADS to supply the A330 tanker derivative for its new fleet just 15 days later.

As you will see in the following pages, your company is increasingly well prepared for the future. In 2007, we have implemented a new corporate governance. Under the chairmanship of Rüdiger Grube, our new Board is more demanding and stimulating for the management. As for the Executive Committee, it is now working as a unified team, under the leadership of a single chief executive. This simplified structure allows greater efficiency, with clearer reporting and accountability, as well as quicker and better making decision process. One of the most important decisions was to elaborate a new roadmap for the coming years, Vision 2020, providing our employees a sense of destiny. This will allow us to gather all EADS entities behind an ambitious strategy immediately cascaded in the form of tangible, operational short-term targets in every Division and function.

Confidence is returning. Welcome to a re-energised EADS.

Louis Gallois
Chief Executive Officer