EADS has shown a sustained strong financial performance, including solid free cash flow and very moderate dividends. We now view EADS' liquidity position as "exceptional" and are therefore raising the short-term rating to 'A-1', according to our criteria. At this stage, we consider it too early to make rating decisions on the proposed merger of EADS with BAE Systems. The positive outlook reflects the possibility that we may raise the ratings if EADS can manage the project risk on A350XWB while maintaining its "modest" financial risk profile, including exceptional liquidity over the next 12 months. On Oct. 2, 2012, Standard&Poor's Ratings Services raised its short-term corporate credit rating on The Netherlands-based European Aeronautic Defence and Space Co. N.V.
