EADS: Deal To Save A400M Not Final Yet

Company said latest funding offer by government customers of its A400M military transport plane was an 'important step,' but warned that a contract had not yet been signed.

PARIS (AP) -- Talks between European defense and aerospace company EADS and the customer governments of its A400M military transport plane gathered momentum Wednesday, although both sides warned a deal had not yet been reached.

EADS and the seven governments that ordered the four-propeller Airbus plane have been locked in a dispute over who will pay for the costly overruns and technical problems that have put the program almost four years behind schedule.

EADS said the latest funding offer by the seven government customers was an "important step," but said it was not definitive and that financial conclusions cannot be drawn yet.

"The letter is definitely an important step toward convergence, but it is not a contract draft," said a statement by EADS, the parent company of Airbus.

In an interview with the German daily Die Welt to be published Thursday, Airbus CEO Thomas Enders said positions on the A400M have narrowed and governments have made up some ground in cost sharing, but "there are still a number of very important questions that remain" and "need to be resolved" before any agreement is made.

Enders was quoted as saying he expects a deal that will be "just about acceptable for us," adding that the program would "represent a significant burden for Airbus for many years."

The EADS statement said it wants further clarification on several items, and said certain points are left open for later discussion. EADS spokesman Alexander Reinhardt declined to comment further.

The German Defense Ministry -- which has the largest single order, for 60 planes -- said Wednesday it had received a response from EADS that offered new proposals. The ministry likewise provided no details.

"They commented on our letter and offered some more proposals from their side," said Lt. Col. Holger Neumann, a spokesman for the German Defense Ministry.

Shares in EADS rose 4.9 percent in Paris trading Wednesday to close at €14.48.

EADS wants a decision so it can book its share of the cost overruns in its 2009 financial results to be released on March 9.

EADS has already taken €2.4 billion ($3.29 billion) in charges, but said it does not have the information it needs to make a final provision for its share of the cost overruns. That will require assumptions and financial assessments that are not yet finalized, the statement said.

EADS received an offer to save the aircraft Monday from the governments of Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

Neumann of the German Defense Ministry said the member governments had agreed not to divulge details of the EADS letter, but in general the two sides were talking about "trying to close the financial gap" between them.

"We are presently examining the letter and assessing what the next steps will look like," Neumann said. "The overall aim remains to find a solution as soon as possible."

If a deal isn't struck by then, the A400M could come up at a regularly scheduled meeting of European Union defense ministers on Feb. 24 on the Mediterranean resort of Mallorca, Spain.

Associated Press Writers David Rising and Matt Moore in Berlin contributed to this report.

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