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Airbus threatens to drop A400M military plane
Airbus spokesman Stefan Schaffrath said on Tuesday that ending the over-budget A400M military transport program “is a scenario” if the military plane project “continues to contribute to a loss.”
“We are suffering from a stagnation,” he said. “The loss-making is serious. This needs to be urgently resolved.”
The comments come just weeks after the Dec. 11 maiden flight of the hulking, gray aircraft with a black nose and four black propellers -- the beginning of a three-year flight test program.
The seven customer governments of the A400M have agreed to re-negotiate the original fixed-price contract. But competing military interests and tight budgets mean they have so far failed to find a compromise.
Analysts said Airbus’ threat was aimed at forcing governments to move ahead with a project that supports 40,000 jobs but is three years overdue and over budget. Canceling would be highly unappetizing at a time of high unemployment across Europe, and alternative planes don’t meet the requirements set out for the A400M. “Sounds like a bit of saber rattling by Airbus,” said David Livingstone, an analyst at the London-based think tank Chatham House. “I expect that Airbus is only testing the resolve of participating nations.”
EADS, Airbus’ parent, hopes governments will either pay more for the planes or reduce the number of planes on order. Other options include reducing the specifications, or spreading increased payments out over time. Gareth Jennings, Jane’s Defense Weekly’s senior aviation analyst, also said cancellation was unlikely.
It suits cash-strapped governments to defer delivery -- and thus payment -- for a few years and while some air forces have expressed an interest in buying Lockheed or Boeing alternatives, governments have not, he said.
 The new military Airbus A400M transport plane is seen during an exhibition flight in Seville, Spain. The company is considering scrapping its A400M project. |
The US-built Lockheed Martin C-130J Hercules carries only half the payload of the A400M, and Boeing’s much more expensive C-17 Globemaster III is considered too large and lacks the tactical versatility of the Airbus design.
The program was launched six years ago with an order for 180 planes from seven governments -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey. The original price was 20 billion euros ($29.5 billion), but a preliminary report by auditors PricewaterhouseCoopers said parent company EADS might need an extra 5 billion euros -- inflating the final bill by 25 percent.
Abandoning the project would cost EADS 5.7 billion euros in advance payments it would have to return to governments -- and would dent its credibility. It has already put aside 2.4 billion euros in provisions against losses related to the plane.
A German defense ministry spokesman, speaking on customary condition of anonymity, said that the decision on the A400 was due by the end of January. A meeting of high ranking defense officials is tentatively scheduled for next week, he said. A spokesman for the Ministry of Defense said Britain “remains committed to A400M, but not at any cost.”
Livingstone noted that existing aircraft, such as the Transall or older Hercules types, could be kept flying for a while as a stopgap, but they will become increasingly expensive to maintain.
Aerospace analyst Richard Aboulafia of the Washington-based Teal Group said that with the cost of the A400M rising, Lockheed’s cheaper plane and Boeing’s larger jet become more attractive. “It is a great opportunity for them if something goes horribly wrong with this game of chicken,” Aboulafia said.
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