http://www.guardian.co.uk/business/2010/jan/05/airbus-considers-scrapping-military-plane-costs-rowAirbus threatens to scrap A400M military plane in row over costs
Airbus owner EADS says European governments must pay more for the delayed aircraft or it could be cancelled.
Airbus is considering scrapping its much-delayed A400M military plane project in a row over costs with the seven European governments, including Britain, which have agreed to buy the aircraft.
Airbus owner EADS hopes the governments will agree to pay more for the plane, which is at least three years overdue, and over budget. Other options include cutting the number of planes on order, reducing the specifications, or spreading increased payments out over time.
The seven governments agreed to renegotiate the original contract, which Airbus CEO Tom Enders claims is badly drawn up and requires the plane maker to shoulder too many cost overruns. But negotiations have stalled over how much they should pay. Airbus spokesman Stefan Schaffrath said ending the project was "a scenario" if it continued "to contribute to a loss".
"We are suffering from a stagnation," Schaffrath said. "The loss-making is serious. This needs to be urgently resolved."
He urged the governments involved – Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey – to reach a decision on whether to continue financing it by the end of this month.
A source close to the plane maker said Enders was growing impatient because of the impact of the crisis on the firm's jetliner business. "Tom Enders is not willing to put the civil aviation business at Airbus at stake for the A400M," the source said.
The A400M completed its maiden flight in Spain last month – with the first delivery due in three years. The programme, launched six years ago with an order for 180 planes from seven governments, has been dogged by problems with its engines. The original price was €20bn (£17bn), but auditors say this could rise by €5bn. Airbus would incur billions of pounds of penalties if it cancelled the planes.
For Britain and France, cancellation would have consequences both for jobs and military requirements. The countries need the airlift capacity for military and humanitarian missions in rugged areas.
There are other planes, such as the US-built Hercules and the Boeing C-17, but none fulfil the requirements set out by European air staffs. The C-130J turboprop carries only half the payload of the A400M, and the more expensive C-17 jet is considered too large and lacks the tactical versatility of the Airbus design.
While it was waiting for the A400M, the RAF acquired six C-17s, and it has flown them out of its air base at Brize Norton in Oxfordshire to Iraq and Afghanistan.
Defence ministers from the seven countries agreed in July to renegotiate the contract after EADS missed a 31 March deadline for the first flight.
