🔴 Hearing of Airbus CEO Guillaume Faury on the obstacles to the reindustrialization of France

I am Guillaume Faury, Executive President of Airbus, accompanied by Mr. Fabien Neman Menant, forgive me, Director of Public Affairs France.

I swear.

Mr. President, Mr. Rapporteur, ladies and gentlemen, good afternoon. I will essentially speak in my capacity at Airbus, but I will also allow myself a few remarks where it makes sense for the entire profession. Indeed, as part of my current role as President of GIFAS, Airbus is known. I will give you a relatively short identity card that will help me address the topics of today's hearing. We are a global leader in commercial aviation, also in helicopters, and a European leader in satellites, with significant holdings in defense and through jointly owned companies in defense with Leonardo and our friends at BAE Systems on missiles (MBDA), and with Safran on ArianeGroup (50-50). We also have other significant holdings like ATR with Leonardo, a regional turboprop leader. Airbus has about €70 billion in revenue last year, the same as in 2019 just before Covid. So after a very sharp decline due to Covid, we are back to about the same revenue level, but with 15-20% inflation in between, so in economic terms we haven't fully recovered. In terms of commercial aircraft deliveries, we went from 863 aircraft in 2019 (a record) to 300 fewer in 2020, and we are now back to 200 more than the low point, but not yet at the 2019 level. This shows the severity of the Covid crisis and that we haven't completely put it behind us. That crisis mainly affected the civil sector, but it was very impactful. So, €70 billion in revenue, of which about €50 billion from commercial aircraft (traditionally known as Airbus), about €12 billion from Defense and Space, and €8 billion from Helicopters (split roughly 50-50 civil and military), making about 20% defense activity, or €14 billion, placing us first in continental Europe excluding the UK. Airbus is a very export-oriented company for France. In 2024, the sector driven by Airbus is a major net exporter for France, with a positive contribution of about €30 billion to the trade balance. So we are very strongly an exporter in a trade balance that is deeply in deficit, and we remain the largest net exporter even during Covid when activity dropped sharply. This shows the importance for France and the French economy. We will return to this later. We are in this situation of very strong positive trade balance because we are mainly in France and Germany, somewhat in the UK and Spain, and very predominantly European: about 90% of our workforce is in Europe. To give a simple picture: about 50,000 Airbus employees in France, 50,000 in Germany, 50,000 in the rest of the world (a large part still in Europe), with significant and growing presence in the US, India, and China. So two-thirds of our workforce in France and Germany, 90% in Europe, one-third in France. This activity is highly export-oriented, based on own activity in France and also a huge amount of purchases from the French supply chain. I will come back to that. It is a very specific characteristic of the aerospace and defense sector in France that we have the entire supply chain for almost all competencies on French territory. We also have a very strong portion of our R&D in Europe, a large part in France: about 40% of the group's R&D is in France, and 90% in Europe. Now I want to dive into the key success factors of this model and its contribution to the French industrial fabric, since today we are the sector that largely drives industrial activity in France. Two of the top three industrial sites in France are Airbus: Toulouse (first) and Marignane for Airbus Helicopters (third). The model relies on several key parameters. First, we are in businesses that develop and manufacture very complex, large products produced in small quantities. This means very high investments, amortized over few products. Scale effect is absolutely critical. We cannot compete if we are fragmented. Unity is strength: the consolidation of aircraft activities from several European countries (Germany, France, UK, Spain) gave Airbus 35-40 years ago the scale to make long-term investments and compete with US manufacturers (McDonnell Douglas and Boeing). So scale is crucial. We Europeans have created this scale in commercial aviation; Airbus now has €50 billion in revenue and has been the world's number one for 5-6 years. We are also global leader in helicopters, consolidating MBB, Aerospatiale helicopter division, and Casa activities. We have done comparable things through programs that brought together European actors in defense and space, and in missiles (MBDA model, created over 20 years ago, pooling activities from BAE Systems, Airbus, and Leonardo to become a global leader). We also did it with ATR on a smaller scale with Leonardo. We do it through cooperative programs like Eurofighter, which brings together investments and skills from France, Germany, Spain, Italy, and the UK through BAE Systems, Airbus, and Leonardo. So scaling up in areas with very high investments is critical for technology and amortizing over larger volumes. That is the first parameter.

The second absolutely essential parameter for the success of these activities today and in the future is technology. We are in domains of very high complexity, highly sophisticated and technologically advanced objects that involve a very large number of technologies. We must continue to work hard on this competitive advantage. We will be competitive in the long term if we continue to have all technologies at the best level when we launch programs. When we launch a major program like the replacement of the A320, the next big challenge to drastically reduce carbon emissions and maintain economic competitiveness, we need to prepare all those technologies. When we issue tenders, we will choose the best suppliers. If we want French suppliers to have a good chance, French companies today (mid-caps, equipment manufacturers) must invest at the right time in these technologies, so they are ready and can offer the best solutions at the right cost. Obviously, there is a French and European dimension because wings are largely designed and built in the UK, and important components in Germany and Spain. So there is a European but also a French game. One element to maintain competitiveness is clearly the cooperation and partnership between state and enterprise that has historically been built, and which we continue to animate through what is called CORAC and the research tax credit. Because when we talk about reindustrialization and competitiveness, we must keep in mind that today, for industrial activity in France, labor cost is a big competitive disadvantage. The tax environment, both in absolute amounts and its variability, lack of predictability and reliability, is another disadvantage. So we must look at what remains as competitive advantage. Clearly, the ability to develop the right technologies on time is a favorable parameter in an ecosystem we continue to maintain through education, training, attractiveness for people who can come work with us. Orchestrating this so that when we launch major programs, a maximum number of companies are ready, have developed the right solutions, understood the challenges, and are ready on competitiveness, environment, and the product itself, including cyber and digital dimensions. This orchestration is done jointly with a common roadmap between the state and companies, co-financing of R&D activities, which then leads to development happening around those activities and skills, and then industrialization largely follows. Without this ecosystem, the business case at the time of choosing industrial locations would very likely not be in France because of labor cost, taxation, and regulatory barriers. So we talk about reindustrialization. The aerospace activity (aeronautics, space, defense) in France is highly industrialized. We don't import much; we develop and produce a lot in France and export. This model contributes to French success. We must be very careful to preserve its ingredients. Otherwise, we risk not reindustrializing but deindustrializing. At the beginning of the year, I took the time to recall what happened in automotive: 20 years ago, €20 billion positive trade contribution. Last year or the year before, it was €10 billion negative. We lost €30 billion in 20 years. If we don't take sufficient care of this aerospace and defense activity, we should not take for granted that we will keep the same trade balance, employment, and activity levels. It must be maintained, cultivated, and protected. In this environment, we also have opportunities. We have the opportunity to be global leader in commercial aviation and thus have the capacity to invest now. At the start of the decade during Covid, we decided on a 10-year roadmap with the state through CORAC, considering that €10 billion in R&T investment over the decade was needed to launch the best decarbonized aircraft for the coming years and help achieve the 2050 decarbonization target. When we launched it, we agreed with the state on a 50-50 co-financing: €5 billion from companies and €5 billion from the state. Since then, the roadmap has been estimated at €14 billion, and the state's share has decreased significantly: initially €450 million per year, then €300 million, now €285 million over a 4-year horizon. So the state is taking much less than planned, companies much more. Nevertheless, we remain fully committed to this success. The economic activity is recovering, and we understand the state budget and debt situation. But we must absolutely hold to this commitment; otherwise, it's no longer a collective game but individual sums, and the ecosystem I mentioned will not be as well prepared for the next aircraft. This is about the long term, but it's absolutely essential to protect our industrial tool, to have competitive industry in France that invests and attacks, by maintaining this joint roadmap and these financings, which are ultimately very small compared to what this sector brings back to France in many ways.

I had the opportunity two or three weeks ago at the Senate hearing on subsidies to specify very clearly what each tax, duty, and charge contributes to the French budget. So what I have to say is quite simple regarding the theme we are covering: we are in a situation where we have a number of activities where we are global leader, have investment capacity, and have more demand for our products than we can supply. So these are good problems, despite all the difficulties: Covid, the war in Ukraine, inflation, interest rates, energy costs, and now US tariffs. There is a lot of complexity to manage, but we manage to stay with our foot forward, as the English say. But we must not think it is immutable; it is very fragile and requires a lot of appetite. We are extremely courted to locate industrial activities elsewhere than in France and Europe, in places with economic support and now increasingly strong local skills. So there is real global competition for industrial activity. What seems important to keep in mind, and I'm sorry to say obvious things that may not please, is that in France we have a very strong imbalance between the cost of a social model we all love but which is very high today and what companies and industry can generate in wealth. We need to rebalance it, because otherwise this cost is increasingly borne by a shrinking number of activities, which become less competitive and move away. We are at a point of imbalance that must be resolved quickly, and that is not something we can do; it's the laws of economics. Competition plays globally, and that is how we get continuous improvement. But when the cost of the social model is what it is in France, we must be able to generate the revenue that matches that cost through economic activity. For many reasons since the end of WWII, the cost of the social model has increased sharply and now weighs so heavily on economic activity that it becomes less competitive and under pressure to leave. The diagnosis, unfortunately, is well known. Now we must act, and acting is difficult and unpleasant because we are really reaching the limits of what the business world can bear in terms of charges. You surely know better than I the comparison with surrounding countries, which is not favorable, and outside Europe, even less favorable. So I come back to my main point: we must absolutely work on our strengths. All that is research, technology, know-how, skills, research funding, and technology implantation in France so that tomorrow's developments are in France, so that industrial activity, even though labor cost is too high, is still located around the centers of know-how we have today. That is very important. Encouraging the presence of industrial sites because they generate activity, skills, and maintain them. Everything that is a hindrance to industrial activity today is deindustrialization tomorrow. We must be careful not to end up there. That's it. What else important can I say? Yes. We have some businesses where we don't have scale, or we had it and lost it. We have scale in commercial aircraft, helicopters, missiles, and in space we suffer enormously. Particularly in satellites, where we have several actors in Europe and there have been colossal investments in the US. Two main US actors have emerged with much greater scale. So we are consolidating among Europeans: Leonardo, Thales, and Airbus with a project to merge our satellite activities to create a kind of MBDA for satellites, to regain scale, add investments instead of competing, add volumes instead of fragmenting. We hope this project will succeed because we absolutely need it; satellites and space are a matter of sovereignty, competitiveness, and European countries absolutely need them. There are still a few sectors where this remains to be done. Obviously in defense, it's clear: the US spends about five times more than the EU on defense equipment procurement, and they buy almost exclusively American. The EU buys about 20% of what the US buys, but of that 20%, 60-70% are bought outside Europe. So Europeans buy from Europeans only about 7-8% of what Americans buy from Americans. And on top of that, we are fragmented: each country buys nationally, favoring national champions. So we don't have scale. In defense, it's the same: very complex, costly systems requiring huge investments, so we must consolidate. When we manage to do so, as with the A400M, NH90, and Eurofighter, we find scale that brings technological, industrial, and military success. So we need to find solutions to do that a bit more. Very important as well, since we are industries with very high investment levels and long-term cycles, we need visibility on budgets and needs, stability on conditions. Everything that has been and continues to be instability in corporate tax, labor cost, while trying to pursue a supply-side policy, is a competitive disadvantage. In the end, industrialization, deindustrialization, reindustrialization is a matter of competitiveness. We are subject to economic laws. I often tell my teams in technology: the laws of physics don't respond to executive decisions. It's the same in economics: the laws of economics don't respond to decisions one way or another. They are what they are. It's competition; the most competitive product wins in markets. We can try to adjust conditions at the margin, but that's what ultimately happens.

So we must be aware of our strengths and weaknesses. There are strengths; we wouldn't be world leaders in all these businesses without strengths, but we must protect them absolutely. If we want to keep this sector as a driver of industrialization in France, with great contributions to the trade balance, tax revenues, training, skills development, and very present ecosystems in the regions. I could repeat what I said two weeks ago at the Senate on subsidies. We are present in almost all regions of France. We have the largest industrial sites; we are the largest private employer in Occitanie and Provence-Alpes-Côte d'Azur. We truly irrigate all territories. We must protect our know-how, skills, and competitive advantages. We need to rework labor cost and taxation. And I should also talk about regulation. I will speak for a few more minutes before handing over for questions. We are utterly over-regulated. I don't say that dogmatically or for pleasure, and I don't criticize any specific regulation because most of the time, when you look at them paragraph by paragraph, there is always a good reason for each paragraph. But we now have a regulatory thicket so complex and difficult to overcome, especially for large companies, that it is a considerable brake. We need to find other ways to achieve the objectives. Very often I agree with the objectives of regulations, but the way of achieving them, the complexity and heaviness, are brakes on innovation and investment that are at least as costly as taxation itself. They are much cheaper to remove and have fewer consequences, and there are often alternative ways to get there. So I strongly encourage Europe in the broad sense (because this is not only a French issue, it's European most of the time, even if sometimes there is over-transposition and additional complexity added to European regulations) to reconsider the conditions for industrial activity. Industrial activity is complex, so it is naturally very subject to regulatory impact. When you are very heavily regulated, it is simpler and therefore more economical to go do the activity elsewhere. I often give a painful example, not for pleasure but to make us realize what we are talking about. When you want to write a piece of software with artificial intelligence and put it in a cloud environment, which is the basis of digital, you are subject to many regulations: Cloud Act, Data Act, Cybersecurity Act, AI Act. I encourage you to read the AI Act; it keeps my teams busy. In fact, what happens is when they need to write a piece of software that goes into the cloud with all these regulations, they ask the legal department if they can do it. The legal department doesn't answer, not because they don't want to, but because everyone asks the same question, so they have a huge number of files, and it's complicated. So in the end, it's easier to go do the software elsewhere than in Europe. That's not what we want. If we want to be global leaders in digital and in industry, including digital and AI, we need much simpler things. It must be very easy to do industrial activity. And I haven't even mentioned CSRD, CS3D, and taxonomy regulations, which have kept us very busy recently instead of letting us do industry, for a result that, from my point of view at least regarding CSRD, is very disappointing. We did a huge reporting effort, we don't really know for whom it is, and in any case it doesn't change our environmental, governance, and social ambitions. So the regulatory issue is at least as important as taxation and charges. It is much less easy to quantify. I can tell you how much a specific tax costs me; I can't tell you how much over-regulation costs. So we tend to forget it. Yet it is an absolutely considerable brake on industrialization, even though it is normally intended to ensure efficient, well-done industrialization that respects certain concepts we broadly agree on. So it's not the intention that is the problem, in my view, but the way Europeans have gone about it. I say Europeans because it's very much a European subject. It is also national, because there is national regulation on some difficulties we have in setting up sites, sometimes with delays that are, let me not use an inappropriate adjective, but not okay compared to what we are trying to do, and discouraging. Once again, other environments welcome us with the red carpet, are very committed and determined to host high-tech industrial activity. So over time, we will lose if we don't solve these problems. That's it. Some advantages are decisive. It's thanks to them that we are where we are today. We invest enormously in this sector in Europe and France because we believe in this ecosystem and its ability to continue projecting itself. But we are very worried when we see that they put ballasts on our feet, over-regulate, or the level of charges becomes potentially decisive negatively for future industrial sites. I conclude: we have large industrial sites today. They will have to be renewed and reinvested for the next generations of aircraft and satellites. Beware of the loss of competitiveness of this economic and industrial environment. It worries me enormously. If in the US (maybe not the current trend in recent months), but also in India and other Asian countries, environments become very appropriate, it will be hard to keep activity, even harder to bring it back. So technology, know-how, skills, and CORAC as far as we are concerned: we need to do more because that's where we can be good. The ecosystems that work need to be protected. If we want aviation to remain in France and Europe, we must love it and help it. We must not put sticks in its wheels, impose additional taxes, or try to weaken it. I said earlier this year: we will be neither a cash cow nor a scapegoat. Very often we feel we are both. That's not how you industrialize or keep your industry. And as for the brakes for all industries – labor cost, taxation, and regulatory complexity – we really need to tackle this. It hurts, it's difficult, everyone is afraid, but by not tackling it, we are losing together, and it will be very hard to recover. So we must tackle it. Once again, I do not underestimate the difficulty. I know it's very hard, but it absolutely must be done, because the later we do it, the harder it will be.

Thank you, Mr. President. Regarding the financing of the social model and funded pensions. This is not my area of expertise, so I will be extremely cautious. My field is business management, aeronautics, and defense. Nevertheless, what seems important to me? First, we must be careful that this is not a voluntary or involuntary way to increase taxes on companies. If it is a way to increase taxes and invent a new mechanism that adds to others or avoids doing what we have to do on pay-as-you-go pensions, it is not a good solution. So there is already the aspect of how it affects business competitiveness. The second remark is that funded pensions, the model seen in the United States, is a virtuous circle that we lack. It is a virtuous circle of innovation financing. Over decades, this model has enriched itself and become self-sustaining in the US. I am not praising the US system; there are many things we want to do differently. However, we must recognize that innovation financing from risk-taking and the use of funded pension money for innovation and business is extremely powerful in the US and increases the wealth gap between the US and Europe. So we must ask how to catch up or set up a system that creates the same positive effects as where funded pensions work very well for innovation and investment. If we set up funded pensions that do not allow this engine of the economy, we would miss one of the stakes of funded pensions beyond finding other financing methods. I believe we must not rush into funded pensions without addressing the rebalancing between the cost of the social model and wealth generation by companies and economic activity, which is the main imbalance to be resolved urgently.

Regarding working together, I think we must be clear that it is not a solution to all problems. Grouping together to succeed together works when economies of scale are a key success factor and we manage to create them by working together. We need to do what I call demand consolidation and supply consolidation at the same time. If we group together at the industrial level to continue making products and developments that are as dispersed as what we did separately, we are not necessarily better together. And if we consolidate demand only to then distribute it among a very large number of actors, we also create complexity that is not necessarily a success. So we must manage to make together objects and systems that will be used by those who group together. I am speaking mainly about defense when I say this: we need to agree on what we want to do together, states must agree on what they want, and it should be roughly the same thing so that we can share investments, come together, and play as a team rather than alone. There is an expression I like: alone we go fast, together we go far. Sometimes we need to go fast on small-scale things and it is very good to do it alone. But when we need very large investments over time and amounts of technology, know-how, and skills that must be sought in several places, federating makes success.

You asked me whether what is valid in the civilian sector is also valid in the military. Well, yes, we have examples where it works in the military. The Eurofighter has clearly worked very well. It is an aircraft quite comparable to what we have in France with the Rafale. They often compete abroad, in any case. But unfortunately we are not in the same generation of aircraft and we have not at all put the same amounts of investment among Europeans as the Americans put into the F35. So today we are in a situation where, looking just at Europe, more countries choose the F35 than the sum of countries choosing the Eurofighter and the Rafale. So we can always ask whether the Rafale or the Eurofighter is better, whether some were right to go alone or others to go together. But when we look at what the Americans have done with economies of scale in a program that also has partners—let's not forget it's not just the US—the impact, the firepower, and the money mobilized, which is roughly ten times more than what we mobilized for either the Rafale or the Eurofighter, leaves no doubt. So cooperating, yes, if we manage to create economies of scale. That also means when the countries that will be the customer countries, the European countries, agree on what they want to do together. That is not always the case. And when it is not the case, I do not necessarily recommend doing it together. However, given the very large investments we have to make today in Europe to rearm and re-equip ourselves with sovereign capabilities, where we have left enormous development to the US and the US has spent much more money than Europe, we must recognize that today they are much more advanced on the systems they have, and often Europeans buy from the US because we have not taken the time, money, or capacity to come together to realize these systems. So yes, if we want to rearm Europe in a sovereign way, Europe will have to spend more money, spend more European, spend better—that is, spend more together to avoid fragmentation and dispersion of investments, so that we have impact and efficiency. It is not easy to do. Cooperating is much more difficult than working alone. I am not saying that. However, when we succeed, global leaders emerge. Once again, we would not be a global leader at Airbus if 40 years ago politicians, engineers, and entrepreneurs had not decided to bring together German, French, then British and Spanish forces to be where we are today. If there were a French aircraft manufacturer, a German aircraft manufacturer, a British aircraft manufacturer, and a Spanish aircraft manufacturer today, there would be zero because none would have the economies of scale or sufficient size to seriously compete with Boeing. So I am not saying it is easy; I think it is difficult. However, I think it is indispensable for a number of large space and military systems ahead of us, on batteries, semiconductors, hydrogen. When we call something an Airbus of something, it means we want to make it a European project and we set out to cooperate and make it succeed. I have no opinion on these particular Airbuses because they are not subjects I know. I praise the intention, if it existed. We must not forget that we fundamentally need to address the right market with the right technologies and the right level of competitiveness. I think some of these projects have had difficulties because of competitiveness.

So yes, if we want to rearm Europe in a sovereign way, Europe will have to spend more money, spend more European, spend better—that is, spend more together to avoid fragmentation and dispersion of investments, so that we have impact and efficiency. It is not easy to do. Cooperating is much more difficult than working alone. I am not saying that. However, when we succeed, global leaders emerge. Once again, we would not be a global leader at Airbus if 40 years ago politicians, engineers, and entrepreneurs had not decided to bring together German, French, then British and Spanish forces to be where we are today. If there were a French aircraft manufacturer, a German aircraft manufacturer, a British aircraft manufacturer, and a Spanish aircraft manufacturer today, there would be zero because none would have the economies of scale or sufficient size to seriously compete with Boeing. So I am not saying it is easy; I think it is difficult. However, I think it is indispensable for a number of large space and military systems ahead of us, on batteries, semiconductors, hydrogen. When we call something an Airbus of something, it means we want to make it a European project and we set out to cooperate and make it succeed. I have no opinion on these particular Airbuses because they are not subjects I know. I praise the intention, if it existed. We must not forget that we fundamentally need to address the right market with the right technologies and the right level of competitiveness. I think some of these projects have had difficulties because of competitiveness.

Regarding supply chains, there is much to say. We suffered a lot during Covid. We were obsessed with avoiding supply chain breaks at certain points. We worked enormously as a team. We came out better than we feared at the beginning of the crisis. We were not always good in the diagnosis we made. We put tools in place that sometimes worked well, sometimes less well. I think we should have no regrets about those that worked less well because at the beginning we did not know very well what was needed and we tried, and overall we succeeded. Our European supply chain held up much better than the US supply chain during the crisis, also because we protected jobs, protected know-how, and perhaps we were also a bit lucky to have a product cycle that was rather favorable while our main competitor, if I speak of Airbus versus Boeing, had its star aircraft, the 737, grounded at that time, so it was perhaps more vulnerable than us. Overall, some things worked, others less well. I have a rather positive judgment on the handling of the crisis. I can be more critical on certain aspects not related to aeronautics, but I will not dwell on that here. What is difficult today in the supply chain are certain hard points. The overall supply chain has largely recovered its ability to ramp up, and we are limited by a few particular crises. We are limited by engines, currently CFM engines, which in the short term are clearly CFM engines, and in the long term are Pratt engines. So in both cases, we are affected by US supply chain issues on the A350 and A220 by the difficulty, the inability of Spirit to ramp up. So we signed a few days ago the acquisition—we have not yet closed, as they say, but we signed the acquisition of a large number of Spirit activities that are for Airbus. So the activities in the US, France, and Great Britain to take back ownership of these activities that really need investment, skills, and know-how in production processes to allow us to ramp up. We have other difficulties, but I think we are moving from the Covid difficulty to the tariff difficulty. And so I come to your last question.

What are you writing there? Ah yes, thank you. I will perhaps deal with it later, it is a good point I forgot to mention. On the subject of tariffs, we are clearly entering a new crisis, and it is multidimensional and global, since tariffs have been imposed by the United States on almost all of their trading partners, with very high amounts of import taxes on China. So when we look at what we are exposed to, I will perhaps be a bit long but I think it is important to understand. We are exposed in several ways. First, if we assume no change in the production and delivery program, we are impacted by the mechanical impact of tariffs. That is, typically, I have a factory in the US that assembles aircraft. So a large part of production is done in Europe. So I export from Europe to the US components, subsystems, large fuselage sections. When they arrive in the US, they are taxed. They are taxed at 10% for now, with a prospect of rising to 20% after 90 days. So I pay import taxes on all these equipment. If they come from Canada, it is not 10% but 25%. So this greatly increases the cost of my activity in the US. This aircraft assembled in the US will then be delivered to a US customer. He buys from the US, so he does not pay import tax, but it increases my production cost in the US. However, it has another effect: when I produce aircraft in Europe and deliver them to the US, those aircraft are subject to 10% import tariff in the US. It does not cost me anything, but it costs my customers 10%. And 10% on an aircraft is considerable relative to the economic equation of an airline; it is really very critical. So they do not want to be in that situation. In the short term, we need to find mechanisms or solutions to avoid it. So not deliver the aircraft, deliver them elsewhere, or potentially agree at some point to deliver to other customers. But for these airlines, it is a loss, either by paying the tariffs—some do—or by refusing to pay the tariffs, thus refusing to take delivery of the aircraft, thereby defaulting on the contract in theory. Then we sit down with them to try to find solutions, but it is obviously not at all a comfortable situation. And then potentially much more serious, there is the entire impact on the supply chain, particularly in the supply chain between the US and China, because 145% or 125% import tax could stop the flow of parts in one direction or the other. So we could find ourselves at some point with production stoppages or delivery stoppages in our supply chain, and then suddenly we are no longer able to make any aircraft. You have to keep one thing in mind: when a supermarket has 3 million references and is missing three, it continues to deliver the other 29,997 references. For me, on an aircraft that has 3 million parts, if three parts are missing, I do not deliver the aircraft. If I do not deliver the aircraft, I stop all other suppliers. So I close the supermarket. Three missing parts, we close the supermarket. That is why we are obsessed with supply chain management and dealing with all these issues. What I am telling you is also true for my American colleagues, my American competitors, who are actually even more exposed to these risks than we are. These tariffs are first and foremost a huge risk for American industry. It is a way of shooting themselves in the foot that is quite surprising. According to the figures I have, in 2023, US civil aviation exported $120 billion and imported $20 billion. So it exports six times more than it imports. So there is no logic for an American to impose tariffs on American aerospace. Yet that is the situation. So our objective, like that of my American colleagues and competitors, is to return to a situation without tariffs, which is the 1979 agreement that greatly benefited the Americans and also the Europeans and Airbus in its ability to serve the whole world with competitive bases, since we exchange a huge amount of goods across the Atlantic. So the situation today is difficult. We are very, very mobilized on the supply chain to avoid supply chain disruptions. This is something we already did with Covid and we think we are capable of doing, but we really need to tackle this subject very seriously. We are fairly well stocked at the moment, so we see no short-term risk, but it is very important that all actions taken, whether by industry in the US, Europe, or other actors, lead back to a situation much more favorable for the entire aerospace sector, including the European aerospace sector. And if we cannot achieve that through negotiation, we will have to, as five years ago, impose symmetrical tariffs on American aircraft and helicopters, so that it becomes so lose-lose, in quotes, that the best thing to do will be to sit around the negotiating table and return to a situation that is more win-win than lose-lose. But I hope we will not have to go that far, since it is quite obvious that today American industry is suffering enormously from the taxes that have been imposed. So we are indeed in a context of multidimensional economic warfare. We are a very important player for Europe, with a significant economic, technological, employment, and prosperity contribution to Europe. We have somewhat regionalized our activity by establishing assembly operations, and not only that, in the US and China. So we are already a bit regionalized, but a world that would be very deglobalized may require us to continue going further in that direction to continue serving American markets, perhaps also Chinese markets, in an environment with very high customs protections. That has potentially quite strategic implications for us, and it is important in this economic warfare context to be attentive to capital and to the sovereignty of a number of technologies, know-how, and companies. So the mechanisms that allow us not to be naive and to protect ourselves at a time when technology plays a very important role are also important subjects for us. We look at them carefully, and we are also one of the actors, meaning we strive to take as suppliers for extremely strategic subjects either ourselves or actors we know we can count on in the long term. But there are areas where today, if we want to be very competitive, we still have to rely on American technologies, particularly in the digital domain. If we have very great fragilities, it is probably in digital vis-à-vis the US, and then in raw materials and electronic components for which European supply chains are not sufficiently robust. But it is clear that digital is a very important concern because it entails not only dependence on American actors but also risks on data, data management, and these are complicated subjects in constant evolution. And when we are also in military activities with customer requirements that are very important for data protection, not only for industrial property issues but also for sovereignty issues, it makes the use of the best IT tools much more complicated, and thus the loss of competitiveness that goes with it. So we are constantly in this tension between finding the right level of protection without losing too much competitiveness, and it evolves very, very quickly, and we never make the best choice. We are always finding compromises and then correcting them if we are not happy with what we have done. There, I try to answer your questions as best I can. I will stop there. I am very precise. Sorry, go ahead, sir.

So our objective, like that of my American colleagues and competitors, is to return to a situation without tariffs, which is the 1979 agreement that greatly benefited the Americans and also the Europeans and Airbus in its ability to serve the whole world with competitive bases, since we exchange a huge amount of goods across the Atlantic. So the situation today is difficult. We are very, very mobilized on the supply chain to avoid supply chain disruptions. This is something we already did with Covid and we think we are capable of doing, but we really need to tackle this subject very seriously. We are fairly well stocked at the moment, so we see no short-term risk, but it is very important that all actions taken, whether by industry in the US, Europe, or other actors, lead back to a situation much more favorable for the entire aerospace sector, including the European aerospace sector. And if we cannot achieve that through negotiation, we will have to, as five years ago, impose symmetrical tariffs on American aircraft and helicopters, so that it becomes so lose-lose, in quotes, that the best thing to do will be to sit around the negotiating table and return to a situation that is more win-win than lose-lose. But I hope we will not have to go that far, since it is quite obvious that today American industry is suffering enormously from the taxes that have been imposed. So we are indeed in a context of multidimensional economic warfare. We are a very important player for Europe, with a significant economic, technological, employment, and prosperity contribution to Europe. We have somewhat regionalized our activity by establishing assembly operations, and not only that, in the US and China. So we are already a bit regionalized, but a world that would be very deglobalized may require us to continue going further in that direction to continue serving American markets, perhaps also Chinese markets, in an environment with very high customs protections. That has potentially quite strategic implications for us, and it is important in this economic warfare context to be attentive to capital and to the sovereignty of a number of technologies, know-how, and companies. So the mechanisms that allow us not to be naive and to protect ourselves at a time when technology plays a very important role are also important subjects for us. We look at them carefully, and we are also one of the actors, meaning we strive to take as suppliers for extremely strategic subjects either ourselves or actors we know we can count on in the long term. But there are areas where today, if we want to be very competitive, we still have to rely on American technologies, particularly in the digital domain. If we have very great fragilities, it is probably in digital vis-à-vis the US, and then in raw materials and electronic components for which European supply chains are not sufficiently robust. But it is clear that digital is a very important concern because it entails not only dependence on American actors but also risks on data, data management, and these are complicated subjects in constant evolution. And when we are also in military activities with customer requirements that are very important for data protection, not only for industrial property issues but also for sovereignty issues, it makes the use of the best IT tools much more complicated, and thus the loss of competitiveness that goes with it. So we are constantly in this tension between finding the right level of protection without losing too much competitiveness, and it evolves very, very quickly, and we never make the best choice. We are always finding compromises and then correcting them if we are not happy with what we have done. There, I try to answer your questions as best I can. I will stop there. I am very precise. Sorry, go ahead, sir.

If we have very great fragilities, it is probably in digital vis-à-vis the US, and then in raw materials and electronic components for which European supply chains are not sufficiently robust. But it is clear that digital is a very important concern because it entails not only dependence on American actors but also risks on data, data management, and these are complicated subjects in constant evolution. And when we are also in military activities with customer requirements that are very important for data protection, not only for industrial property issues but also for sovereignty issues, it makes the use of the best IT tools much more complicated, and thus the loss of competitiveness that goes with it. So we are constantly in this tension between finding the right level of protection without losing too much competitiveness, and it evolves very, very quickly, and we never make the best choice. We are always finding compromises and then correcting them if we are not happy with what we have done. There, I try to answer your questions as best I can. I will stop there. I am very precise. Sorry, go ahead, sir.

Thank you for your question. These two questions are very important for us. As you said, it is in our interest to have a set of suppliers, an ecosystem that works well, and the way the GIFAS works—I am taking my hat as president of the sector association for a moment—is to play together. We are the reference grouping in Europe. There is also the automotive grouping in Germany that is very powerful, and we are the reference grouping by the way we animate the functioning of GIFAS, not only among large groups but also very much with intermediate-sized companies, what we call equipment manufacturers, SMEs, and now also startups. We have nearly 100 startups, we have more than 500 members in GIFAS, and we managed the entire Covid crisis, not only but the Covid crisis as a team with all the companies. It is very surprising because I was in the automotive industry at one time, as was recalled, to see how much the small and medium-sized enterprises and equipment manufacturers of GIFAS will tell you how well the sector is animated, the support they get from large groups, and we never fight just for ourselves. When we do, we always fight for the entire sector. So we have many actions. For example, you remember, we set up two funds: the first during Covid, another recently to cope with the ramp-up, where we put our own money, that of the four large groups, with Airbus putting much more than the others, I must say, and public money and private investor money to constitute funds to bring equity into companies during Covid and recently to be able to finance the ramp-up. There are not many other places where you will find comparable things. In fact, Spain did a little bit on a slightly smaller scale and also inspired by what we had done in France. And it worked very well. We did not fully understand at the beginning the problems that small companies would have because in fact they had too much cash. They had too much cash because when you ramp down, you actually give money to companies. When you ramp up, it draws on their working capital needs. When you ramp down, it is the opposite. And we at Airbus put 7 to 8 billion from our balance sheet into paying the supply chain because we continued to honor the orders we had placed and we paid for deliveries we received even as we ramped down. However, when it started to ramp up again, it was much more difficult. A number of companies did not manage well this situation where they had cash, so everything was fine, but in fact it was cash they would need for the ramp-up. It is when they did not manage this cash situation well that they let it decrease, either because they did not adapt their company format to a situation that lasted a long time or because they moved cash elsewhere. We had real difficulties, but overall this crisis was rather well managed and we contributed very strongly to it. We continue to do many things for this sector in France through what I described earlier: preparing the future and financing research so that they have the right technologies. Why do they not do it themselves? For two reasons. First, they do not necessarily know which technology they are expected to deliver. From this point of view, CORAC is also a conductor, the DGAC, which aligns everyone around the necessary major directions. Second, they do not have much money to invest. And here we come back to the problem of competitiveness. These small and medium-sized enterprises have the same problem as other similar companies in the US or elsewhere: they generate much less profitability and therefore much less capacity to finance digital standardization, cybersecurity protection, training, but also industrial tools or technology. So for them too, regaining competitiveness—lowering labor costs, taxes, and charges related to regulatory complexity—is absolutely essential. We come back to the same subject. On access to money, I think I have answered a bit indirectly. Perhaps it is worth mentioning other intervention subjects we have done together to have a supply chain that meets our needs. That is what we did with Safran and Tikehau on Aubert & Duval, which we took over to reinvest in it and have a sovereign player in high-level alloys for engines and aircraft. We needed that, a titanium sector, to build a European titanium sector, thus finding sovereignty issues through the takeover of this company. For access to financing, I think the subject that has occupied and worried us the most and continues to worry us is the discrimination of belonging to the aerospace branch a little but not too much in France, sometimes elsewhere in Europe, but also and especially on financing related to defense companies. And there, we were very shocked in our sector to see that the taxonomy designated defense activity as a non-eligible activity, that is, a bad activity, when in fact it is there to ensure security and therefore the ability to protect oneself and therefore prosperity, investment capacity, and thus decarbonization, etc. A defense activity, by nature, should be supported, and we are still struggling despite everything that has happened in Europe around us to fight for it to be legitimate. This is a very important parameter that is in the hands of the authorities, in the hands of the banking and insurance sector, but it depends enormously on what European and national authorities decide to do. The situation is improving but it is not yet a good situation, and we are very far from the situation seen in the Anglo-Saxon world where financing defense is perfectly legitimate, well seen, and well considered. Defense and security activities are common-sense activities, activities that contribute to society, its prosperity, and its security. You just have to keep that in mind. So I think I have mentioned the main elements I wanted to address with you on the fact that in France, at least, this is a sector that is active around us. We are at the service of this sector. We know perfectly well that if one or two or three bend, the entire sector can give way. And that is also why we help each other when there are difficulties. No particular tax mechanisms for depreciation to accelerate investment. You would have to ask the representative of SMEs at GIFAS. Perhaps she would have a more precise opinion than me on that. I think what I hear constantly is access to human resources, which we have handled very well in the last two or three years, whereas 2021-2022 was very hard. So we hear that much less. Today, we had the energy cost issues that were real problems. Now what I see much more is a return to fundamental competitiveness: the ability to generate sufficient margins in a global environment, in a global competition, and therefore labor costs, taxation, and the regulatory environment must absolutely be lightened. And that is much more quickly catastrophic for an SME or an intermediate-sized company than for a large group. So it is hyper-sensitive for these companies. Important.

We have many actions. For example, you remember, we set up two funds: the first during Covid, another recently to cope with the ramp-up, where we put our own money, that of the four large groups, with Airbus putting much more than the others, I must say, and public money and private investor money to constitute funds to bring equity into companies during Covid and recently to be able to finance the ramp-up. There are not many other places where you will find comparable things. In fact, Spain did a little bit on a slightly smaller scale and also inspired by what we had done in France. And it worked very well. We did not fully understand at the beginning the problems that small companies would have because in fact they had too much cash. They had too much cash because when you ramp down, you actually give money to companies. When you ramp up, it draws on their working capital needs. When you ramp down, it is the opposite. And we at Airbus put 7 to 8 billion from our balance sheet into paying the supply chain because we continued to honor the orders we had placed and we paid for deliveries we received even as we ramped down. However, when it started to ramp up again, it was much more difficult. A number of companies did not manage well this situation where they had cash, so everything was fine, but in fact it was cash they would need for the ramp-up. It is when they did not manage this cash situation well that they let it decrease, either because they did not adapt their company format to a situation that lasted a long time or because they moved cash elsewhere. We had real difficulties, but overall this crisis was rather well managed and we contributed very strongly to it. We continue to do many things for this sector in France through what I described earlier: preparing the future and financing research so that they have the right technologies. Why do they not do it themselves? For two reasons. First, they do not necessarily know which technology they are expected to deliver. From this point of view, CORAC is also a conductor, the DGAC, which aligns everyone around the necessary major directions. Second, they do not have much money to invest. And here we come back to the problem of competitiveness. These small and medium-sized enterprises have the same problem as other similar companies in the US or elsewhere: they generate much less profitability and therefore much less capacity to finance digital standardization, cybersecurity protection, training, but also industrial tools or technology. So for them too, regaining competitiveness—lowering labor costs, taxes, and charges related to regulatory complexity—is absolutely essential. We come back to the same subject. On access to money, I think I have answered a bit indirectly. Perhaps it is worth mentioning other intervention subjects we have done together to have a supply chain that meets our needs. That is what we did with Safran and Tikehau on Aubert & Duval, which we took over to reinvest in it and have a sovereign player in high-level alloys for engines and aircraft. We needed that, a titanium sector, to build a European titanium sector, thus finding sovereignty issues through the takeover of this company. For access to financing, I think the subject that has occupied and worried us the most and continues to worry us is the discrimination of belonging to the aerospace branch a little but not too much in France, sometimes elsewhere in Europe, but also and especially on financing related to defense companies. And there, we were very shocked in our sector to see that the taxonomy designated defense activity as a non-eligible activity, that is, a bad activity, when in fact it is there to ensure security and therefore the ability to protect oneself and therefore prosperity, investment capacity, and thus decarbonization, etc. A defense activity, by nature, should be supported, and we are still struggling despite everything that has happened in Europe around us to fight for it to be legitimate. This is a very important parameter that is in the hands of the authorities, in the hands of the banking and insurance sector, but it depends enormously on what European and national authorities decide to do. The situation is improving but it is not yet a good situation, and we are very far from the situation seen in the Anglo-Saxon world where financing defense is perfectly legitimate, well seen, and well considered. Defense and security activities are common-sense activities, activities that contribute to society, its prosperity, and its security. You just have to keep that in mind. So I think I have mentioned the main elements I wanted to address with you on the fact that in France, at least, this is a sector that is active around us. We are at the service of this sector. We know perfectly well that if one or two or three bend, the entire sector can give way. And that is also why we help each other when there are difficulties. No particular tax mechanisms for depreciation to accelerate investment. You would have to ask the representative of SMEs at GIFAS. Perhaps she would have a more precise opinion than me on that. I think what I hear constantly is access to human resources, which we have handled very well in the last two or three years, whereas 2021-2022 was very hard. So we hear that much less. Today, we had the energy cost issues that were real problems. Now what I see much more is a return to fundamental competitiveness: the ability to generate sufficient margins in a global environment, in a global competition, and therefore labor costs, taxation, and the regulatory environment must absolutely be lightened. And that is much more quickly catastrophic for an SME or an intermediate-sized company than for a large group. So it is hyper-sensitive for these companies. Important.

These small and medium-sized enterprises have the same problem as other similar companies in the US or elsewhere: they generate much less profitability and therefore much less capacity to finance digital standardization, cybersecurity protection, training, but also industrial tools or technology. So for them too, regaining competitiveness—lowering labor costs, taxes, and charges related to regulatory complexity—is absolutely essential. We come back to the same subject. On access to money, I think I have answered a bit indirectly. Perhaps it is worth mentioning other intervention subjects we have done together to have a supply chain that meets our needs. That is what we did with Safran and Tikehau on Aubert & Duval, which we took over to reinvest in it and have a sovereign player in high-level alloys for engines and aircraft. We needed that, a titanium sector, to build a European titanium sector, thus finding sovereignty issues through the takeover of this company. For access to financing, I think the subject that has occupied and worried us the most and continues to worry us is the discrimination of belonging to the aerospace branch a little but not too much in France, sometimes elsewhere in Europe, but also and especially on financing related to defense companies. And there, we were very shocked in our sector to see that the taxonomy designated defense activity as a non-eligible activity, that is, a bad activity, when in fact it is there to ensure security and therefore the ability to protect oneself and therefore prosperity, investment capacity, and thus decarbonization, etc. A defense activity, by nature, should be supported, and we are still struggling despite everything that has happened in Europe around us to fight for it to be legitimate. This is a very important parameter that is in the hands of the authorities, in the hands of the banking and insurance sector, but it depends enormously on what European and national authorities decide to do. The situation is improving but it is not yet a good situation, and we are very far from the situation seen in the Anglo-Saxon world where financing defense is perfectly legitimate, well seen, and well considered. Defense and security activities are common-sense activities, activities that contribute to society, its prosperity, and its security. You just have to keep that in mind. So I think I have mentioned the main elements I wanted to address with you on the fact that in France, at least, this is a sector that is active around us. We are at the service of this sector. We know perfectly well that if one or two or three bend, the entire sector can give way. And that is also why we help each other when there are difficulties. No particular tax mechanisms for depreciation to accelerate investment. You would have to ask the representative of SMEs at GIFAS. Perhaps she would have a more precise opinion than me on that. I think what I hear constantly is access to human resources, which we have handled very well in the last two or three years, whereas 2021-2022 was very hard. So we hear that much less. Today, we had the energy cost issues that were real problems. Now what I see much more is a return to fundamental competitiveness: the ability to generate sufficient margins in a global environment, in a global competition, and therefore labor costs, taxation, and the regulatory environment must absolutely be lightened. And that is much more quickly catastrophic for an SME or an intermediate-sized company than for a large group. So it is hyper-sensitive for these companies. Important.

For access to financing, I think the subject that has occupied and worried us the most and continues to worry us is the discrimination of belonging to the aerospace branch a little but not too much in France, sometimes elsewhere in Europe, but also and especially on financing related to defense companies. And there, we were very shocked in our sector to see that the taxonomy designated defense activity as a non-eligible activity, that is, a bad activity, when in fact it is there to ensure security and therefore the ability to protect oneself and therefore prosperity, investment capacity, and thus decarbonization, etc. A defense activity, by nature, should be supported, and we are still struggling despite everything that has happened in Europe around us to fight for it to be legitimate. This is a very important parameter that is in the hands of the authorities, in the hands of the banking and insurance sector, but it depends enormously on what European and national authorities decide to do. The situation is improving but it is not yet a good situation, and we are very far from the situation seen in the Anglo-Saxon world where financing defense is perfectly legitimate, well seen, and well considered. Defense and security activities are common-sense activities, activities that contribute to society, its prosperity, and its security. You just have to keep that in mind. So I think I have mentioned the main elements I wanted to address with you on the fact that in France, at least, this is a sector that is active around us. We are at the service of this sector. We know perfectly well that if one or two or three bend, the entire sector can give way. And that is also why we help each other when there are difficulties. No particular tax mechanisms for depreciation to accelerate investment. You would have to ask the representative of SMEs at GIFAS. Perhaps she would have a more precise opinion than me on that. I think what I hear constantly is access to human resources, which we have handled very well in the last two or three years, whereas 2021-2022 was very hard. So we hear that much less. Today, we had the energy cost issues that were real problems. Now what I see much more is a return to fundamental competitiveness: the ability to generate sufficient margins in a global environment, in a global competition, and therefore labor costs, taxation, and the regulatory environment must absolutely be lightened. And that is much more quickly catastrophic for an SME or an intermediate-sized company than for a large group. So it is hyper-sensitive for these companies. Important.

So I think I have mentioned the main elements I wanted to address with you on the fact that in France, at least, this is a sector that is active around us. We are at the service of this sector. We know perfectly well that if one or two or three bend, the entire sector can give way. And that is also why we help each other when there are difficulties. No particular tax mechanisms for depreciation to accelerate investment. You would have to ask the representative of SMEs at GIFAS. Perhaps she would have a more precise opinion than me on that. I think what I hear constantly is access to human resources, which we have handled very well in the last two or three years, whereas 2021-2022 was very hard. So we hear that much less. Today, we had the energy cost issues that were real problems. Now what I see much more is a return to fundamental competitiveness: the ability to generate sufficient margins in a global environment, in a global competition, and therefore labor costs, taxation, and the regulatory environment must absolutely be lightened. And that is much more quickly catastrophic for an SME or an intermediate-sized company than for a large group. So it is hyper-sensitive for these companies. Important.

Thank you, Mr. Rapporteur. So indeed, the situation in the west is very dynamic and we see that it has extremely protectionist intentions. So that questions us on how to respond and position ourselves as Europeans in relation to this initiative, this policy. I think that for our sector, American industry will come out weakened from this episode. So I think it is important to be wise and lucid on the responses that will be made so as not to worsen the situation on the European side. It is bad on the European side but it is probably even worse on the American side, and we need to find the levers to resolve it. And if that is not the case, we will have to react by imposing symmetrical tariffs to protect ourselves. But that would be an American isolation because I see no reason to impose them on other countries of the world than the US if it is they who consider that tariffs should remain in the long term. So I think the match is being played out. We need to play the match on China. Yes, we are facing a clear strategic intention for several decades by China to enter the commercial aviation field with very long-term investments and a number of tools that China uses to achieve this. In particular, the fact that 20% of the world market is the Chinese market, that COMAC is state-owned, and that the major Chinese airlines are also state-owned, so the entry into service of the aircraft is done with orders, so to speak, imposed by the state for the Chinese airlines that will operate this aircraft more or less independently of their will, but because it is a strategic decision of the Chinese state to do so, and it has the bread and the knife, it has the manufacturer and the operators to do it in the long term. So it is very likely that the Chinese will find the means to put it into service, they have done so, to ramp up, they are doing so, and to have an aircraft that is used quite widely in China alongside the Airbus A320 and the Boeing 737. They have the ambition to serve the world market and to compete with the Airbus A320 and the Boeing 737 on the world stage. And they applied for certification many years ago from EASA, the European Aviation Safety Agency, for a certification that they are conducting, and if we listen to the head of EASA, there is still some time to achieve it because they surely have a number of compliance issues with European regulations and the way they are interpreted in Europe to reach the same level or close to the same level as that imposed on us, Airbus and other European actors. So if they succeed, and I think they are quite consistent in their intentions, they give themselves the means to achieve their objectives, they will have a certified aircraft and they will compete with Airbus and Boeing in an industry that is on a cost basis quite different and a regulatory basis very different from what we know in Europe, which I have spoken about previously. So we must consider that it is a potentially very competitive and therefore very dangerous actor in the medium or long term. They will take time to get there. However, they also have a number of vulnerabilities. They rely on equipment, systems, and engines that are essentially Western. So Westerners, some Western companies—Airbus is not one of them, we are a competitor of COMAC—help COMAC enter the big leagues. That is possibly a question for regulators, a question to ask if we consider that competition is not fair, to also ask about the support given to the Chinese industry. We are still operating as in the era of a large global market with WTO rules, assuming everyone respected WTO rules, but we see that we are deviating a bit in commercial aviation, particularly on this point. So COMAC is there to enter the European market. They are already soliciting a number of customers to enter Southeast Asia and countries under Chinese influence. And we think they will one day come with financing packages and a number of tools that will allow them to gain market share. So it is indeed their intention to be a global player in the single-aisle aircraft sector, which for Airbus represents three-quarters of what we sell. Three-quarters of the aircraft we deliver are from the A320 family. So it is really the heart of the market, and that is where they are entering. And it is true that Boeing's difficulties, both as a manufacturer with the two 737 crashes, industrial difficulties, quality problems, the financial crisis the company is going through, and now the American attitude and the additional weakening that causes to Boeing, are an opportunity, an opening of a window of opportunity for COMAC, which is

Yes, we are facing a clear strategic intention for several decades by China to enter the commercial aviation field with very long-term investments and a number of tools that China uses to achieve this. In particular, the fact that 20% of the world market is the Chinese market, that COMAC is state-owned, and that the major Chinese airlines are also state-owned, so the entry into service of the aircraft is done with orders, so to speak, imposed by the state for the Chinese airlines that will operate this aircraft more or less independently of their will, but because it is a strategic decision of the Chinese state to do so, and it has the bread and the knife, it has the manufacturer and the operators to do it in the long term. So it is very likely that the Chinese will find the means to put it into service, they have done so, to ramp up, they are doing so, and to have an aircraft that is used quite widely in China alongside the Airbus A320 and the Boeing 737. They have the ambition to serve the world market and to compete with the Airbus A320 and the Boeing 737 on the world stage. And they applied for certification many years ago from EASA, the European Aviation Safety Agency, for a certification that they are conducting, and if we listen to the head of EASA, there is still some time to achieve it because they surely have a number of compliance issues with European regulations and the way they are interpreted in Europe to reach the same level or close to the same level as that imposed on us, Airbus and other European actors. So if they succeed, and I think they are quite consistent in their intentions, they give themselves the means to achieve their objectives, they will have a certified aircraft and they will compete with Airbus and Boeing in an industry that is on a cost basis quite different and a regulatory basis very different from what we know in Europe, which I have spoken about previously. So we must consider that it is a potentially very competitive and therefore very dangerous actor in the medium or long term. They will take time to get there. However, they also have a number of vulnerabilities. They rely on equipment, systems, and engines that are essentially Western. So Westerners, some Western companies—Airbus is not one of them, we are a competitor of COMAC—help COMAC enter the big leagues. That is possibly a question for regulators, a question to ask if we consider that competition is not fair, to also ask about the support given to the Chinese industry. We are still operating as in the era of a large global market with WTO rules, assuming everyone respected WTO rules, but we see that we are deviating a bit in commercial aviation, particularly on this point. So COMAC is there to enter the European market. They are already soliciting a number of customers to enter Southeast Asia and countries under Chinese influence. And we think they will one day come with financing packages and a number of tools that will allow them to gain market share. So it is indeed their intention to be a global player in the single-aisle aircraft sector, which for Airbus represents three-quarters of what we sell. Three-quarters of the aircraft we deliver are from the A320 family. So it is really the heart of the market, and that is where they are entering. And it is true that Boeing's difficulties, both as a manufacturer with the two 737 crashes, industrial difficulties, quality problems, the financial crisis the company is going through, and now the American attitude and the additional weakening that causes to Boeing, are an opportunity, an opening of a window of opportunity for COMAC, which is

COMAC is there to enter the European market. They are already soliciting a number of customers to enter Southeast Asia and countries under Chinese influence. And we think they will one day come with financing packages and a number of tools that will allow them to gain market share. So it is indeed their intention to be a global player in the single-aisle aircraft sector, which for Airbus represents three-quarters of what we sell. Three-quarters of the aircraft we deliver are from the A320 family. So it is really the heart of the market, and that is where they are entering. And it is true that Boeing's difficulties, both as a manufacturer with the two 737 crashes, industrial difficulties, quality problems, the financial crisis the company is going through, and now the American attitude and the additional weakening that causes to Boeing, are an opportunity, an opening of a window of opportunity for COMAC, which is

Probably beyond what they themselves hoped for, and which is therefore likely to accelerate them. So there we are, we are moving from two players to three players. That's also very important to keep in mind when we talk about the competitiveness of the next generation of aircraft, or even the competitiveness over time of our current industrial tool, because we are going to have an actor who has a number of reasons to be more competitive than us, at least on labor costs, taxation, and regulation. And that must make us very, very strongly question the protection also, through our own means, through our own competitiveness, of this economic activity essential to the country today.

So if we exclude what I said about COMAC's access to the major Chinese airlines, today the world's airlines play the game of competition between Airbus and Boeing, and they do so in a very, very fair way, let's say, which leads European airlines to buy from the United States and American airlines to buy from Airbus. And the United States is a very large market for Airbus. So we have evolved in an environment where competition was fairly undistorted, and that was rather favorable to Airbus because we came with aircraft that I think were better than the competition. So we were able to access European airlines, but not exclusively. There are plenty of European airlines that do not buy Airbus at all, or buy little, or buy some Boeing and a lot of Airbus. I thank them and am grateful for their trust. I think that is the help Airbus would have needed 30 or 40 years ago and which did not necessarily exist at the time. But I think that is no longer the issue today. Today, I am delighted that when European airlines choose us, it is because they are convinced we have the best aircraft. And since today we must recognize that we have difficulty producing as much as necessary to deliver all customers, I respect the choice of all customers today. We try to convince them with good arguments, but I don't think it is a good idea to impose on European airlines to buy European. In any case, for now. After all, if the game continues to evolve very, very strongly in the United States with what I called American regionalization or isolation, effectively American airlines will be almost forced to buy Boeing because otherwise it will be economically unviable if tariffs are very high. And then we will have to ask ourselves what we do in Europe. I hope we don't reach that point because everyone would lose in the end.

So, regarding the payment of the fine linked to what in French is called the 'convention judiciaire d'intérêt public' or the deferred prosecution agreement in English and American law, we must remember that this was an investigation conducted by three authorities: American, French, and English, which cooperated, and in the end we indeed paid 3.6 billion euros in fines—2 billion to the French treasury, 1 billion to the English, 0.5 billion to the Americans. So we just need to put things in perspective about what happened at the time. And the fact that there is a 'convention judiciaire d'intérêt public' was absolutely essential at the time, since we were able to have a joint effort by the three authorities that led to a common resolution and to turning the page and bringing the company back to the highest level of compliance practices after this crisis. Nevertheless, it is true that American extraterritoriality is a way of seizing power beyond the borders of the United States and has many consequences for the life of companies. It is very important, as these rules proliferate, develop, and severely impact companies, that an equivalent can be developed in terms of imposing rules or defending compliance with European rules to balance the game and not let American domination become a problem that is unmanageable or difficult to manage for non-US companies. So when an American regulation with extraterritorial scope is put in place, it is up to Europe—I think it is the right scale to respond—to see what good mechanisms to put in place to defend ourselves, which could be either defense or counterattack, simply for the purpose of establishing an economic, sovereign, and technological balance. There are many dimensions—legal and otherwise—to this situation. That means that among Europeans, we must also be able to agree, because defense mechanisms can be relatively national. Counterattack mechanisms must be at the right scale, and therefore European. So we need a shared vision of how we want to defend ourselves. And I think that is something Europe has suffered from: many different visions of what was acceptable or not, what we could dare to do or not vis-à-vis the United States, and also with the drawbacks of extraterritoriality, because there is often a price to pay for creating extraterritoriality, and it is not always a price we Europeans are ready to pay. There are a number of elements of extraterritoriality in American legislation that over time damage the competitiveness of American industry. So we must also see both sides of the issue. But what is clear is that we must defend ourselves, because it is generally quite aggressive or at least intrusive.

Thank you for this question. We are very aligned with Olivier. I hope that will show through my answer. And we are facing a somewhat frustrating situation, since Ariane was the world leader in commercial satellite launches for years and years. And in the transition between Ariane 5 and Ariane 6, we saw the emergence of SpaceX, a very different economic model, a firepower with private and public money in quite impressive quantities, and given the launch rate on which SpaceX is based, an industrialization capacity on one side and technology on the other that are almost uncatchable today. So we arrived with an Ariane 6 that was a bit delayed. That is not unusual, unfortunately, in space programs, but above all with a technological base and an economic model that had suffered enormously from what happened in the United States in the meantime. However, Ariane 6 is flying today. It performs better than what was planned when it was launched—we must say it, after all. It is not a failure of realization; it is simply that the world has changed a lot during that time. And moreover, a number of actors and European countries have said to themselves, 'Why shouldn't we do it ourselves?' And SpaceX is actually a successful startup. Why not try to create our own startups to reach that scale? I think there is a misjudgment about it being a startup. They benefited from 15 years of NASA investment, particularly in the engine that powers the first stage of the Falcon rocket. So a certain number of people made interpretation errors. I won't criticize them, because I think that Europeans, Ariane at the time, also underestimated SpaceX's ability to make reuse a technological success. So we probably also made our mistakes at that time. We are where we are. Now what seems absolutely important to me is: what should be done? What should be done is to come together again among Europeans, because there are few other sectors that require being together more than space. These are very small numbers of objects that are extremely sophisticated and where we don't have a huge amount of money to invest. So we should rather come back together among Europeans rather than fight among Europeans, which unfortunately is what is happening today. The phase we are in is what it is. The ESA member states have decided on a competition for the successor to Ariane 6, and that competition is underway. France has decided to play in the competition and to equip itself with Maia, an actor that must have the means to win the competition. Now, it is nonetheless an unfortunate way of accepting the division we are in. I am absolutely convinced that we will again have to regroup our forces, because we are facing, once again, one actor, several actors, but especially one actor that launches more than 100 times a year, while we launch a few times a year. That can be counted on the fingers of two hands, so we are not at all on the same order of magnitude. If we further fragment, segment, and divide ourselves, we have no chance of achieving the scale effect we need to catch up, which we managed to have for many decades. For many decades, Ariane was the model of European success; it was a bit like the Airbus of its time. It was a European success, and we were very proud of it, and we saw that sometimes we can trip ourselves up. We will have to find at least a form of sovereignty, if not a form of dominance over part of the activity, by coming back together. That is what we are trying to make possible, but for now, the main European countries considered cannot find a common roadmap, even if individually they all agree that the current situation is more likely to weaken us than to strengthen us. I hope that reason will eventually prevail and that Europeans will work together. As for the rule of geographical return, yes, it is a vulnerability, a weakness, a considerable handicap compared to competitiveness. Why do we have this? Because Ariane is also financed by smaller countries in the space domain, besides the big countries—Germany, France, Italy. And those countries, when they put in a little money, also want to ensure some return on their territory. We understand that they defend the interest of public money. But since there are very few players and it is not at all a fluid market, this leads to forms of monopoly for a certain number of actors that make them non-competitive and prevent Ariane, in its role as prime contractor, from being able to go to the most competitive equipment suppliers and to manage a supply chain as we traditionally do, and as our main American competitor does very well. So what had reasons to exist at one time and worked, in my view no longer works, and therefore we will have to change it, but in a way that still motivates all European actors to work together. So there is no very easy alternative, except to have a real industrial space plan that involves, quote-unquote, the smaller countries so that they too find their account.

I do not wish to go down that path. I said I was aligned with Olivier on what concerned Ariane.

I said in my introductory remarks that Europeans must buy more security and defense equipment, significantly more, if they want to rise to the level of the challenges and the security environment we are in. That is not good news, but it is a fact. So I think we need to face it. Secondly, we will have to buy much more European if we are to have European sovereignty in the design and manufacture of these equipment, as well as supply, and thus be truly autonomous in what is most vital: the security of our countries and our citizens. And thirdly, we will have to buy more efficiently and therefore more together. So yes, there should be a European preference, but the right form must be found. There are a number of systems that do not exist today in Europe but exist in the United States because they have spent much more money for much longer. So it can't be 100% from the start. And that's the right quantum. Different European countries do not necessarily have the same point of view depending on where they come from in terms of percentage of acquisitions outside Europe, and also depending on the density of their own defense industrial base in the country. So each sees things from their own perspective. I think there is a consensus on buying more European and finding a rule that is broadly acceptable to everyone. We took a position in the context of the GFAS and then within the ASD in that direction, with a percentage that was ultimately subscribed by the vast majority of ASD companies: 65%, if my memory serves.

So, I wasn't even in short pants when Airbus was created. So I will be very careful and very modest in answering this question. But I think we have a textbook case before us. We are trying to create not an Airbus but an MBDA of satellites, which is ultimately not so different. And we are really into the project, and we have before us the test case, the proof, to know whether the answer is yes or no. So we will know quickly. After that, I think there are several things. There must be, as I said at the beginning, political will, entrepreneurial will, and engineering will in terms of technological skills. I think there are fields—space is one—where we have the technological skills. I think we are currently demonstrating, with Patrice Caine and Roberto Cingolani, my counterparts at Leonardo and Thales, the will to create an Airbus of satellites. If I say 'Airbus of satellites,' they won't be very happy because it's about bringing together Leonardo, Airbus, and Thales, but something that is European in its dimension, and we will judge the political will and capacity to make this company, this idea, this concept, this project possible. We are in that phase, and as we say in English, 'the jury is out.' The jury has left, it is deliberating. We don't know yet where we stand. We must do our part of the work. It's a bit easy to put everything on others, but we must do our part: build the case, present it, make it a good case. But I think we are at a very important moment to judge whether we are capable and whether we have the will to do it. There is generally very good support for the project in the various European countries where we are present. We'll see.

So, I am not an expert on competition law in Europe, but that is indeed what it is about. It is European competition law, and it will decide—at least those who interpret and apply it will decide—whether we have a case that justifies getting there or not. What I can perhaps tell you to try to help answer, to contribute to the answer, is that this idea has already existed in the past, and there have already been preliminary projects, sometimes quite advanced, to make possible what we are once again trying to make possible. And at that time, there was not enough strong external competition; we were not in bad enough shape in Europe to think we could succeed. Now we have SpaceX, we have Starlink, we have the large Chinese constellations arriving, and the current players—Thales Alenia Space, Airbus Defence and Space—are in great financial difficulty on a number of space activities. So what had to happen has happened. Now it's here. I think everyone is capable of taking into account the new reality we are in. I think we have a good chance of succeeding because we are in this situation. The question is: what if we weren't? What if, when there was no SpaceX yet and we saw threats emerging, and we should have done it in anticipation with good timing, would we have had the support to do it? I am not sure. I am not at all sure. But this is a question of law, not of business or entrepreneurship. And indeed, we have a law, we have a European philosophy that was built on a certain vision of the world at a time when we needed to maximize competition in Europe in the interest of individual companies, not to maximize the competitiveness of Europe. And so in many areas where scale effects are needed, and therefore very large, powerful players, the philosophy behind corporate law and European competition law prevents, slows down, and discourages the emergence of dominant champions, because the belief, the dogma, is that we must prevent that in order to maximize competition among players, to animate competition. And that must work, I imagine, in some fields, but in our trades, it effectively blocks the emergence of very large, powerful players capable of competing with American or Chinese actors who are indeed on a much larger scale and in countries where it is okay to have very large, powerful actors. So we need to revisit this philosophy if we want to avoid continuing to be unable to see the emergence of very large players in activities where scale effects, once again—and I repeat myself—where critical size are essential elements of success. Not all industries are critical-size industries. We are at the heart of such industries.

Yes, thank you, Mr. Chairman. So, should we impose preventive tariffs on Chinese equipment that would come to Europe in our sector? I think the answer is 100% no, because we are not in a sector where there are Chinese capacities, or even overcapacities, that will, shall I say, be dumped—I think that's the term you used—onto the European market due to a lack of access to the American market. We are not at all in that situation in our sector. And I think carefully to cover the 360° sector: civil aviation, commercial, business jets, engines, helicopters, equipment, systems—we are truly an industry that is still largely Western. So I think the answer is no. To your second question: COMAC is emerging somewhat in the same way that Chinese car manufacturers emerged, with very strong help and support from Western equipment suppliers. So what makes the C919 competitive and viable today is that it is equipped with LEAP engines from Safran and GE, and those companies helped them learn to build an aircraft. If we compare with automotive, 15 years later, 10 or 15 years later, they learned to build cars, now know how to do it very well, and have developed their own entire equipment that is now coming to Western markets with a number of competitive advantages that these entire equipment items do not have. And those who, 15 years ago, were very happy to find a little extra market by serving an emerging market or emerging players in China are today effectively playing defense with, I would say, a wave of entire equipment, skills, and know-how directly challenging them around the world and also in Europe. So the same pattern is potentially repeating in aviation, with Western aviation equipment suppliers who have helped COMAC find solutions to build its aircraft. The decisions are political. What do we want? But very clearly, what is playing out before our eyes, we see it: it is the repetition of what happened in other industries. And if we are not able to run much faster with serious competitive advantages compared to COMAC's rise in power, then what happened in other fields will quite likely happen in aviation.

That is a real industrial question. Thank you for asking it. Is geographical proximity and an ecosystem a competitive advantage? Yes, it is. It clearly is. And when you have a employment basin with multidimensional skills, so to speak, in different types of trades but around the same object or same know-how, and you manage to maintain it over time, it is difficult to catch up. And we see that we have a very powerful aviation ecosystem in Toulouse, and space too. We also have a bit of the same thing in Great Britain around wing and engine skills. There are a few regions with good examples, and it is good to maintain them because as long as they exist, they thrive. I think the competitive advantage or asset it represents has nonetheless diminished over time. Today, the diffusion of knowledge, the exchange of information, the ability to communicate has enormously increased with the ability to travel physically quite far, but also and especially with the internet, digital, and the ability to be in near-immediate environments thousands of kilometers away. Sometimes you are more connected with someone 5,000 km away because you are constantly in videoconference, talking, exchanging files, than with someone in a building next door whom you don't know, haven't seen, and don't know where their office is, and in the end there is not much difference. So we must use this competitive advantage, this asset, but it may be less powerful than it was in the past. We should not overestimate its strength. So, should regions be specialized by sector? What makes the Toulouse region very strong today—aviation—when COVID arrived, it scared us all very much because when you have a very strong asset and it suddenly disappears, it becomes a great vulnerability. So I think the answer is rather yes, but to a certain extent. You need to specialize in several know-how areas in a region, not make yourself completely dependent on a single know-how or sector, but I think having ecosystems is something that indeed has a lot of firepower. Yes.

Yes. So, I have figures on the cost of standards and regulations, but I'm not going to give them to you because in fact I don't really know how they are calculated, how they are estimated, and I would be really afraid of telling you things that are not accurate. What is clear is that the orders of magnitude of the figures given to me are indeed of the same order as the relief we made. So if we think we lost on the other side what we gained, it's really a shame. Especially since there are two points that seem important to me. One: we do not disagree with the objectives pursued. We are not against these standards because they deal with particular subjects. And the second is that it is the multiplication of standards that makes the situation very frustrating and slows us down enormously. In our industry, we need two things: scale effect and speed. Scale effect: we have a lot of difficulty establishing it. When we have it, we win. Speed: today we have a lot of difficulty achieving it. And in fact, if I give you—maybe we'll try to give it to you anyway—the cost of what CSRD cost us: we will put the cost of the people mobilized, the time spent, the financing of auditors, statutory auditors. We'll come to what? Maybe 10 million euros, 20 million for Airbus. I don't consider that to be what it cost us. What it cost us is the enormous mobilization of management time and countless personal time on these subjects that is not at all for doing industry, it is for doing reporting, and in this case for actors who are not necessarily our friends. So in fact, that is my problem with CSRD: it's not the objectives pursued in terms of environment, governance, and social. We are completely in line with the objectives pursued. And so it is contradictory to agree with the object, with the finality, and to disagree with the means. And as soon as you say you disagree with CSRD, you are suspected of having two ways of expressing yourself, of being inconsistent with ourselves, of saying one thing and pursuing another. No, no, no, no. It is the way it was done that is problematic, because it is a huge slowdown, or even a competitive advantage for others. I have no European competitor that has produced a CSRD report, but I have American and Chinese competitors who read my CSRD report, and we had to fight—we didn't win everywhere—to get what are called 'omissions,' sectors we protected, that we did not report because it was too big a competitive advantage for my competitors to know what I am doing without me knowing what they do in the same field. So that is the problem with CSRD: at Airbus, we are convinced, especially on the environment which is a huge area of action for us for the next generation of aircraft that we want to progress. There are other areas besides CO2, but it is nonetheless a main area of action. We are putting enormous amounts of money, time, and commitment into it. But CSRD does not help us do that. On the contrary, it takes time away from other things and makes us vulnerable. That's a shame. And that is just one example. There are many others. CS3D is also potentially something that will make us extremely vulnerable in this global competition game at a time when we say we want to reindustrialize. So at some point, and once again on CS3D, it's not the objectives I question. They are laudable, and moreover, for most of them, we pursue them ourselves. It's the way it is done, the complexity, and ultimately the discouragement it represents to do business in Europe when there is no such constraint elsewhere. So there you go. When a company has this kind of difficulty, a bad answer to a good question, we ask the question a second time, rework the subject until we find a better way of doing things. And that is what I recommend.