The consolidated net cash position at 31^st December 2007 was €7.0 billion, a 66.1% increase from 31^st December 2006. The increase primarily reflects a solid €3.9 billion gross cash flow from operations, as well as changes in working capital resulting in a positive impact of €1.2 billion. This increase was partially offset by investing activities that consumed €(1.6) billion, as well as a (€(303) million contribution to plan assets of pension schemes in Germany.

Gross Cash Flows from Operations

Gross cash flow from operations was less impacted than EBIT* in 2007 by one time effects, and amounted to €3,862 million in 2007, compared to €3,541 million in 2006 and €3,868 million in 2005.

Changes in Other Operating Assets and Liabilities (Working Capital)

Working capital is comprised of inventory, trade receivables, other assets and prepaid expenses netted against trade liabilities, other liabilities (including customer advances) and deferred income.

Changes in working capital resulted in a positive impact on the net cash position for 2007 (€1.2 billion) and a negative impact on the net cash position for 2006 (€(0.1) billion). In 2007, the main net contributor to the positive working capital variation was pre-delivery payments from customers (€4.8 billion), €1.2 billion of which resulted from the securitisation of future receivables (guaranteed customer payments) following achievement of an important milestone on the Paradigm programme in 2007. Approximately half of the remaining €3.6 billion in pre-delivery payments resulted from customer payments at Airbus. The positive variation of advance payments received was partially offset by the change in gross inventory in 2007 (€(3.0) billion), reflecting inventory growth across all divisions, in particular at Airbus which accounted for approximately half of the total.

In 2006, the main net contributor to the negative working capital variation was the change in gross inventory (€(1.9) billion), primarily reflecting the ramp-up of Airbus production of the A380, partially offset by the inflow of overall pre-delivery payments from customers (€1.6 billion).

European Government Refundable Advances. As of 31^st December 2007, total European government refundable advances received, recorded on the balance sheet in the line items “non-current other liabilities” and “current other liabilities”, amounted to €5.3 billion, including accrued interest.

For 2007, new receipts of European government refundable advances totalled €0.2 billion and reimbursements totalled €0.4 billion. Related accrued interest for 2007 of €0.3 billion was recorded on the balance sheet in the line items “non-current other liabilities” and “current other liabilities”.

Set out below is a breakdown of total amounts of European government refundable advances outstanding, by product/project.

Cash Used for Investing Activities

Management categorises cash used for investing activities into three components: (i) industrial capital expenditures, (ii) customer financing and (iii) others.

Industrial Capital Expenditures. Industrial capital expenditures (investments in property, plant and equipment and intangible assets) amounted to €2.0 billion for 2007, as compared to €2.7 billion for 2006 and €2.8 billion for 2005. A380-related capital expenditure totalled €0.2 billion for 2007, as compared to €0.7 billion for 2006 and €0.8 billion for 2005 (including capitalised research and development costs).

The remaining portion of capital expenditures in 2007 related to other programmes at Airbus of €0.7 billion (relating primarily to the A400M programme) and additional programmes in the other divisions of €1.1 billion, including the build-up of Skynet 5 satellites at Paradigm and ongoing businesses. Excluding Airbus and Paradigm-related expenditures, EADS’ other divisions incur approximately €0.7 billion annually in capital expenditures related to ongoing businesses. Investments in aircraft leases are included in customer financing, and not in industrial capital expenditures, even though the underlying assets are eventually recorded in property, plant and equipment.

For the period 2008 to 2009, it is expected that the majority of EADS’ capital expenditures will occur in connection with Airbus activities — in particular, for the A350 XWB programme in respect of which firm commitments are currently being negotiated with risk sharing partners within the context of planned Airbus site divestments.

Customer Financing. EADS aims to structure financing so as to facilitate the future sell-down or reduction of its exposure. With gross exposure at its lowest level in two decades, consolidated cash flows generated by customer financing amounted to €61 million for 2007, as compared to an exceptionally high level of €1,160 million for 2006. The cash inflows in 2006 and 2007 primarily result from the payments received on sell-downs and repayments of outstanding finance leases and loans over the course of the year more than offsetting additions to customer sales financing. See “Sales Financing”.

Others. For 2007, the positive €417 million figure primarily reflects the sale of buildings and participations in small entities as well as the sale of Embraer shares. For 2006, the positive €179 million figure primarily reflects the sale of LFK GmbH to MBDA and other asset sales.

Free Cash Flows

As a result of the factors discussed above, positive free cash flows amounted to €3.5 billion for 2007, as compared to €2.0 billion for 2006 and €2.4 billion for 2005. Positive free cash flow before customer financing was €3.4 billion for 2007, as compared to €0.9 billion for 2006 and €2.2 billion for 2005.

Contribution to Plan Assets of Pension Schemes

In 2007, the cash outflow of €(0.3) billion relates to the implementation of a Contractual Trust Arrangement (CTA) for allocating and generating pension plan assets in accordance with IAS 19. The CTA was initially funded by a €0.5 billion contribution in cash and securities (thereof €0.3 billion in cash, €0.2 billion in securities not classified as cash-equivalent) by certain EADS companies in Germany. See “Notes to Consolidated Financial Statements (IFRS) — Note 22b: Provisions for retirement plans”. EADS may make additional contributions to plan assets over time in order to reduce the provision for retirement plans on its balance sheet.

Other Changes in Financial Position

In 2007, the cash outflow of €(337) million primarily reflects the change in the proportional consolidation of MBDA from 50% in 2006 to 37.5% in 2007. The cash inflow of €67 million in 2006 generally mirrors the currency effects on financial liabilities.