Ref. Ares(2022)3471212 - 05/05/2022 Commissioner Carlos Moedas Meeting with Airbus EPP Study days, Valence 09-03-2018, 11.30 AM Main contact person:                Cabinet Member: RTD H.3 Contributor: RTD H.3 1/14

1. STEERING BRIEF Scene Setter (…) – Airbus received (payment) €250 million from FP7 (223 projects), including €103 million from the Clean Sky Joint Undertaking (43 projects) and it has until now received around €73 million from Horizon 2020 (29 projects) and €20 million from Clean Sky 2 (29 projects), representing 324 projects in total State of play: Airbus has never faced as much upheaval as it does today (DW, 14.02.2018). Following corruption scandals in the Defence segment, Airbus agreed to settle a corruption investigation in Germany by paying an €81 million fine to the authorities (Munich). The investigations are not yet over in Austria, the UK and France. Uncertainties about the future of the A380 led Airbus, in early February 2018, to consider the end of its production (after losing a major order of around 40 A380 from the Emirates - who ordered Boeing 787). The military transporter A400M had long delays and problems. On 5 February 2018, Airbus met with several NATO members in London and discussed reductions to fines imposed on the company due to delivery delays and failing to meet contract capability requirements for its A400M (Defence News, 29.01.2018). Reports point out to the provisional agreements, with Airbus taking $1.6 billion charge. These issues have contributed to the unprecedented organisational restructuring. Nevertheless, in 2017 Airbus acquired, with a surprising move, the majority stake of the CSeries of Bombardier (for a symbolic 1$) after the trade war between US and Canada. This new partnership brings together two complementary product lines, with 100-150 seat market segment expected to represent more than 6,000 new aircraft over the next 20 years. There is an internal restructuring in Airbus at senior management level with the following notable changes:                                                                                         1 seeks no further mandate after his term expires at the end of April 2019 .  .                                                                                       .                                ,                                              .                                                                  .  Beyond those challenges, the upcoming years for Airbus are about manufacturing and delivering on time. The backlog as of January 2018 stands at 7253 aircrafts. The revenues of Airbus were €67 billion; EBIT Adjusted €4.3 billion; EBIT Reported €3.4 billion. Airbus R&D spending for 2017 were on the level of €2.8 billion compared to €2.97 billion in 2016 (-5%). 1 Airbus Press Release – 15/12/2017 - http://www.airbus.com/newsroom/press- releases/en/2017/12/succession-planning.html 2/14

Positions of the interlocutor:               is a strong proponent of innovation. That is why he hired                                                             in the first place. Objectives   Maintain good relations with Airbus as the largest European Aircraft integrator.   Exchange views on the upcoming EU Aviation research framework programme with focus on Partnerships (i.e. Clean Sky, SESAR, Space Joint Undertaking)   Exchange views on the industrial competitiveness (1 in 20 jobs in Europe is transport related) in these precarious times for international trade.   Exchange views on the environmental aspects of aviation for the benefit of the citizens and their mobility.   Exchange views on the fragmentation of the aviation research landscape, and the need for synergies between Aeronautics, Space, Defence, Manufacturing and ICT.   Get the support of Airbus for a strong EU Research Framework Programme in the next MFF.   Get the support of Airbus in the ongoing developments, regarding openness, partnerships and missions. probable objectives for this meeting:   Promote a dedicated EU Aviation R&I Programme under FP9, at these profitable but uncertain times for European aeronautics;   Make a strong case for CleanSky and SESAR;   Promote the creation of a JTI on Space;   Discuss the Clean Sky nomination process for the post of Director. 3/14

Lines to Take Introduction    I am really pleased to meet such a great strong proponent of innovation,            one of Europe's flagship innovative companies.  taking a majority stake in the struggling Bombardier, while many suggested that you kept it out of the hands of Chinese COMAC.                                    Airbus in difficult times with a great success, and I have no doubt that you will successfully do so in these uncertain times,    This will be most welcome, as the private sector more than ever has a central role to play in boosting our European economy by investing in research and innovation.    Under my guidance, the European Commission has dedicated a good part of the collaborative aviation research budget to disruptive innovation, including hybrid- 2 electric advancements . I am fully aware of your commitment and enthusiasm in this matter.    Member States and the EU Institutions work towards the next Framework Programme. We want to ensure an impact-oriented approach, improve openness and transparency, rationalise partnerships and promote R&I missions across sectors and disciplines that will trigger the imagination and ambition of European researchers and industrialists.    Business as usual is not in our plans. The European Commission wants your support, appreciating the impact you have on the whole European and International aviation supply chain to deviate from purely incremental research and development. Partnerships    30 years of EU funded aviation research have contributed to strong European partnerships, which delivered technologies and capabilities for Airbus and other European integrators and suppliers.    Many such partnerships can take off and fly without the European Commission involvement; however we believe that we should strongly support the collaborative research and disruptive innovation that will contribute with technologies and capabilities for the next stream of European demonstrators.    Our collaborative programme within the transport challenge, as well as Clean Sky, SESAR, ECSEL and Factories of the Future have delivered good and solid results. We work towards an even more efficient programme and your ideas have provided fuel for my staff. Thank you for that!    More specifically, the Commission will strive in simplifying the landscape for partnerships, and ensure that an impact-oriented approach is developed. Openness and transparency will be central to partnerships, as has been strongly suggested in the Council Conclusions of December 2017 and the Commission Communication of January 2018 on the interim evaluation of Horizon 2020. 2 More than 80 M€ from H2020 Aviation collaborative program have been earmarked on this topic. 4/14

  In this context, the Commission is reviewing the large scale R&I partnership initiatives for potential support under the next FP, notably based on the potential for high impact.   While partnerships will be an integral part of FP9, specific partnerships based on Art. 187 (i.e. Clean Sky – DG RTD, SESAR – DG MOVE, Space – DG GROW) will not be detailed in the Commission proposal for the FP9 regulation, but defined at a later stage.   Regarding the nomination of Clean Sky Director, 19/04/2018 has been designated as a tentative date for Senior Officials Committee (CCN) to interview the shortlisted candidates. The date for shortlisted candidates to meet with me is not yet fixed, but will be so that the Board can adopt a decision before summer break. Conclusions   I believe in a European Aviation ecosystem, with leadership not only in aircraft manufacturing but also maintenance, operations, new business models and above all good services and mobility for European citizens. I would welcome your views in this regard.   Airbus is a symbol of unity for Europeans. Take this as a message, for all your decisions that have impact on European jobs and growth. Work closer together with other European manufacturers and supply chain in these precarious for trade times. 5/14

2. BACKGROUND NOTES CV Current mandates: 6/14

ANNEX 1 - Aircraft Market Analysis & Outlook  2017 Global Aerospace and Defence Sector Outlook (by Deloitte) suggests that Growth prospects remain upbeat.  Global A&D sector revenue growth is likely to be around 2.0%.  Commercial aerospace subsector revenues are likely to remain flat, experiencing only a 0.3% increase – marginal growth expected as aircraft production recovers in 2017 after a slowdown in 2016.  Defence subsector revenues are likely to grow at a much faster 3.2% in 2017 as defence spending in the US has returned to growth, after multi-year declines in defence budgets and future growth may be driven by the newly elected US administration’s increased focus on strengthening the US military.  Operating earnings for the commercial aerospace subsector are expected to grow 20.6%, while defence subsector’s operating earnings will likely rise 7%.  European A&D sector is expected to record a 2.5% year over year increase in revenue and 9.3% growth in operating earnings in 2017.  For the US A&D sector, revenue is expected to be up 1.7% with a strong spurt of 12.7% in operating profits.  The long term outlook towards 2033 for civil aerospace is positive. It is valued to $5 trillion for expected global orders and $3 trillion for the service sector.  The short term outlook towards 2020-2025 for civil aeronautics is characterised by increased production levels to cope with the long backlogs as well as incremental improvements and risk adverse investment climate.  From the airlines point of view, selection of engines is a major part of their aircraft fleet planning. From the aircraft integrators point of view, engines represent approximately 1/4 of the AC value.  Although all major commercial aircraft programmes (A380, A350, A320neo, B787, B737max) have finished and the last ones will enter into service (EIS) this year, both Airbus and Boeing (as well as all the other smaller aircraft integrators such as Bombardier, Embraer, Honda, ATR, Mitsubishi, Shukoi and COMAC) are redesigning older models with newer more efficient engines (A320, A330, B737, B787). 7/14

ANNEX 2 - VAHANA by Airbus (disruptive innovation) Airbus will demonstrate in 2018 Vahana, a single passenger, all-electric, fully autonomous, vertical take-off and landing air-taxi demonstrator. Vahana intends to open up urban airways by developing the first certified electric, self- piloted vertical take-off and landing (VTOL) passenger aircraft. Vahana will be used by everyday commuters as a cost-comparable replacement for short-range urban transportation like cars or trains. No more traffic accidents or train delays to impact your plans. Speeds will be 2-4 times faster than cars or traffic, and have a flight range of about 80 km. 8/14

ANNEX 3 - ASD High-Level Position on Aeronautics in the next Framework
Programme (FP9)

ASD FP9 — ASD High-Level Position
Cor

 

Association of Europe

ASD High-Level Position on Aeronautics in the next
Framework Programme (FP9)

1. CONTEXT

Aeronautics is 3 global business based on excellence, technology and high-level skills. With 160 Bn€ of
revenuss, over 550 000 direct employess' and indirectiy more than 1.5 million jobs, the European
Aeronautics' industry is 3 key contributor to European economic performance and competitiveness. This is
the result of high levels of public-private investment: in Research and Technolagy (R&T) made over the last
decades by Member States and the European Union, together with industry.

Over the past 40 years, Europe has progressively become a world leader in ciwil aircraft manufacturing.
However, the competitive technology and business landscape for air transport is changing rapidly and the
European aviation ecosystem has to adapt swiftly and smartly to major game changers. These includethe
new environmental requirements agresd under COP21, the rising demand for all air transport, the reform
of Air Traffic Management, the unprecedented level of public support In tne US to its domestic Aeronmautics
industry, the emergence of new competitors such a5 China, and the technology challenges driven by
digitalisation and electrification.

Europe's Aeronautics industry is thus facing today probably one of its most challenging technological
periods. Despite this incressingiy demanding environment, Europe must remain a centre of excellence in
Aeronautics for the great benefit of its citizens [job provider, environment protection, safe, secure and
convenient mobility for all] and in the interest of Europe’s strategic autonomy. The Aeronautics industry
must continue to pioneer. Even if the private sector invests massively in the development of new aircraft,
public grants and public-private partnerships are key to foster innovation for sustainable transport.

2. CLEAN SKY & SESAR: ACHIEVEMENTS

The two major European Aviation Research Programmes, Clean Sky |gresner and more efficient aviation
technologies) and SESAR (Air Traffic Mansgement R&T), act a: catalysts for the whole innovation chain in
Europe. Thanks to their long-term technology rosdmap and financial commitment, the two avistion Joint
Undertakings |JUz} hawe prowen their efficiency and their added value for both public suthorities and
innovation chain, mostiy in:
-Dssigning, developing, manufacturing and operating more competitive, safe and environmentally
sustainable aircraft and Air Traffic Management (ATM)} Systems;
-Cresting 3 large and efficient science and technology community of =cademic research
professionals and industries, from large companies to SMES“, through all EU-28 countries;
-Delivering outstanding demonstrators with = real impact on the aircraft programmes and market.

' 2016 ASD Facts & Figures — accessible at http-//woww. asd-europe org/facts-figures
* Around 250 SMEs have already been involved in the Clean Sky 1 programme

ASD | Rue Mantoyer 10 I 1000 Brusseks, Belgium | T: +32 2 775 8110 I info@asd-europe.org | www.asd-europe.org

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