Create a free account to continue

Airbus Puts Pressure On A400M Customers

Plane maker will reduce its exposure to troubled A400 military transport plane project unless governments that ordered it reach decision on financing cost overruns.

MADRID (AP) -- Airbus will reduce its exposure to the troubled A400 military transport plane project unless the governments that ordered it reach a decision soon on financing cost overruns, an official said Thursday.

Airbus Military spokesman Jaime Perez-Guerra said time is of the essence because Airbus parent company EADS presents its 2009 earnings on March 9.

He said EADS needs a decision so it can book its share of the cost overruns in its 2009 financial results, rather than carry over uncertainty into the first quarter.

"We are squeezed, absolutely squeezed," Perez-Guerra told The AP.

Perez-Guerra said EADS is not setting a new deadline for a decision but insists one must be all but completed very soon. If not, he said the company will take measures that could include diverting money, personnel and equipment to other projects.

"EADS really has to see that an agreement is practically sealed," he said.

Airbus CEO Tom Enders gave the warning Wednesday as he met with union leaders during a visit to an Airbus plant outside Madrid, the spokesman said.

France said this week the seven nations that have ordered the plane have agreed to commit an extra euro2 billion ($2.75 billion) in funding. France is proposing that governments make available an extra euro1.5 billion in reimbursable loans. The project is nearly four years behind schedule.

EADS has reduced its demands for extra funding to euro4.5 billion -- but the government proposal still falls euro1 billion short.

The four-engine turboprop military plane had its maiden flight in December. The price tag for the 180 planes ordered was fixed at almost euro20 billion in the initial contract in 2003. Germany is the biggest costumer with 60 aircraft ordered, and France wants 50.

The A400M is seen as occupying an important niche market between the Lockheed Martin C-130J Hercules, which carries only half the payload, and Boeing's C-17 Globemaster III, which is larger, costlier, and less tactically versatile.

The countries that have ordered the planes are Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

More in Supply Chain