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A400M: Governments up pressure on EADS

disclaimer: image is for illustration purposes only
by Staff Writers
Berlin (UPI) Jan 21, 2009
European governments stepped up the pressure on EADS and its daughter Airbus, the maker of the controversial A400M military freighter, at talks in Berlin that could make or break the project.

The partner governments met Thursday in Berlin with officials from European Aeronautic & Space and daughter company Airbus to discuss additional funding for the delayed program. The talks were halted Thursday without result and will be continued Friday, German government officials said.

EADS says it needs additional money from the seven partner governments to continue the program.

Yet Germany, which accounts for a third of the 180 ordered aircraft, said its patience had run out.

"Our readiness to compromise in relation to cost developments and the necessary performance parameters are limited," German Defense Minister Karl-Theodor zu Guttenberg was quoted in the newspaper Bayernkurier as saying.

French Defense Minister Herve Moring said earlier this week that EADS should shoulder a "very significant share" of the cost overrun after it surfaced that a report by auditor PricewaterhouseCoopers said the EADS management was to blame for it.

The Financial Times Germany newspaper reports that the A400M won't even have the characteristics specified in the contract. "We promised services that we can't deliver," the newspaper quoted an EADS official as saying. It will likely not be able to cruise in autopilot at low altitudes or carry the Puma infantry fighting vehicle -- two features demanded by Germany.

Airbus, owned by EADS, wants partner nations Germany, Britain, France, Spain, Turkey, Belgium and Luxembourg to pump an additional $7.5 billion into the project. EADS is ready to shoulder $3.4 billion.

But Germany is unwilling to chip in more. Last year it agreed to pay an additional $930 million on top of the $8.6 billion it has already committed under the original contract.

Abandoning the A400M would mean Airbus would have to pay back some $8 billion in funding to the governments. The company is already pumping some $100 million a month into the program because it has not agreed with the partner governments over its extension.

It's not that the countries don't need a new freighter plane: Britain is eager to modernize its current fleet of Hercules and Boeing C-17 carriers, worn by the mission in Afghanistan; and France and Germany want new transport planes to replace their four-decade-old C-160 Transall machines, which are slow and inflexible.

However, the A400M has had engine problems, and Germany has doubts that the plane can be delivered in a reasonable time period.

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