The increase in consolidated total equity in 2007 primarily reflects the effects of (i) changes in actuarial gains and losses, which in turn primarily reflect actuarial gains with respect to the participation in BAE Systems pension plans in the U.K., and (ii) changes in accumulated other comprehensive income (“AOCI”). These were partially offset by net loss for the period and the cash distribution to shareholders and dividends paid to minorities during 2007, as well as the change in minority interests. Set forth below is a discussion of AOCI and its impact on consolidated total equity. For a discussion of the other line items affecting consolidated total equity, see “Notes to Consolidated Financial Statement (IFRS) — Note 20: Total equity”.

In 2007, AOCI increased by €121 million. The change in AOCI was due to the positive variation (after accounting for deferred taxes) of the year-end mark-to-market valuation of that portion of EADS’ hedge portfolio qualifying for cash flow hedge accounting under IAS 39.

IAS 39 Related Impact on AOCI

At 31^st December 2007, the notional amount of the outstanding portfolio of hedges qualifying for IAS 39 hedge accounting treatment (“cash flow hedges”) amounted to approximately U.S.$51.3 billion hedged against the Euro and the Pound Sterling. The year-end mark-to-market valuation of EADS’ portfolio of cash flow hedges resulted in a positive AOCI valuation change of €0.4 billion from 31^st December 2006, based on a closing rate of €-U.S.$1.47, as compared to a positive AOCI valuation change of €1.2 billion at 31^st December 2006 from 31^st December 2005, based on a closing rate of €-U.S.$1.32.

Positive pre-tax mark-to-market values of cash flow hedges are included in other assets, while negative pre-tax mark-to-market values of cash flow hedges are included in liabilities for financial instruments. Year-to-year changes in the mark-to-market value of cash flow hedges are recognised as adjustments to AOCI. These adjustments to AOCI are net of corresponding changes to deferred tax assets (for cash flow hedges with negative mark-to-market valuations) and deferred tax liabilities (for cash flow hedges with positive mark-to-market valuations). Set out below is a graphic presentation of cash flow hedge related movements in AOCI over the past three years (in €m).

Related movements in AOCI

As a result of the positive change in the fair market valuation of the cash flow hedge portfolio in 2007, AOCI-related net assets increased to €5.1 billion for 2007 from €5.0 billion for 2006. The corresponding €0.1 billion tax effect increased the AOCI-related deferred tax liability to €1.6 billion at 31^st December 2007.

Currency Translation Adjustment Impact on AOCI

The negative €(196) million currency translation adjustment (CTA) related impact on AOCI in 2007 reflects the consequences (negative €(168) million) of the merger of Airbus Groupement d’intérêt économique (“Airbus GIE”) (a U.S. dollar-denominated entity) into Airbus SAS (a Euro-denominated entity) as well as the negative effects of the weakening U.S. dollar. Before the merger, Airbus GIE operations were recorded at the current exchange rate of the period except for those hedged with financial instruments. As from 1^st January 2004, former Airbus GIE operations are recorded on the basis of historical exchange rates. As a result, no additional CTA is generated by former Airbus GIE operations. The portion of outstanding CTA as at 31^st December 2003, booked in respect of non-monetary balance sheet items relating to transactions realised as from 1^st January 2004 (i.e., mainly aircraft deliveries), is gradually released to the consolidated income statement, in line with such deliveries. See “Critical Accounting Considerations, Policies and Estimates — Foreign Currency Translation”.