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France: Airbus A400M Deal Being Finalized

Thu, 02/25/2010 - 5:15am
Slobodan Lekic, Associated Press Writer

PALMA DE MALLORCA, Balearic Islands (AP) -- The seven nations behind the A400M military transport and its manufacturer are finalizing a deal on the future of the largest joint military project in European history, top European defense officials said Thursday.

Airbus claims the A400M, which uses the largest turboprop engines ever fitted to a Western aircraft, will be able to carry twice the load of another competitor, the Lockheed Hercules, and that its fuel-efficient power plants will make it cheaper to operate than the jet-powered C-17.

"We feel we're in the last stretch to a final agreement in the next few weeks," Spanish Defense Minister Carme Chacon said after a meeting of her EU counterparts on this Spanish island. She said all seven customer nations remained committed to the project.

French Defense Minister Herve Morin said planemaker EADS had replied to a joint European proposal to overcome the deadlock caused by cost overruns and program delays. A comprehensive agreement was being hammered out "step-by-step," he said.

And in Paris, a Defense Ministry spokesman said the signing of "the principle elements of an accord" could take place March 8.

EADS and the seven customers -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey -- have been embroiled in a tug of war over who should pay for billions in cost overruns in a program that is almost four years behind schedule. The euro20 billion ($26.9 billion) project is over budget by about euro5.2 billion ($7 billion).

Morin said EADS -- the Airbus parent company -- had responded to the customers' final offer by asking for guarantees that the 180 total order book won't be reduced, and that technical specifications are not be further amended.

Britain has already indicated it may reduce its order from 25 to 22 aircraft. Germany wants to install an innovative terrain-following system that would allow the hulking plane to fly low-level missions.

EADS also asked for clarification of the euro1.5 billion in loan guarantees the customers are offering, besides a euro2 billion in funding they will provide to cover cost overruns, Morin said.

In Paris, an EADS spokesman said he had no immediate comment about the ministerial statements.

It is likely that EADS will in the end bear a significant portion of the difference in the project's total cost. Although EADS has said in the past that it would not accept that, the prospect of lucrative foreign sales -- including a possible order for 120 planes by the U.S. Air Force -- will likely influence its decision to remain in the program, officials said.

Morin said there was significant interest abroad for the four-turboprop strategic airlifter.

"I am confident its technical superiority will give it a huge export potential," he said. "Compared to the C130J (Hercules) it's not more expensive despite cost overruns, and it has a lift capacity vastly superior to its U.S. competition."

European nations have long been hampered by the shortfall in strategic military airlift capabilities. In the 1990s, they struggled to deploy forces to nearby troublespots in Bosnia and Kosovo without using U.S. Air Force transports such as the Boeing C-17 Globemaster III.

The A400M's four turboprops, mounted high on the wing, also will allow it to fly in and out of unprepared airstrips where jet-powered transports with engines slung low beneath the wings face the danger of ingesting runway debris, Airbus says.

Associated Press writers Greg Keller and Jamey Keaten in Paris contributed to this report.

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