A400M – TIME FOR GOVERNMENTS TO SAY YES!
By Howard Wheeldon, Senior Strategist at BGC Partners
05 Jan 09. Having finally made it into the air back in December it should come as little surprise that Airbus senior management would be pretty quick to request that government partners jump remaining price agreement hurdles allowing the A400M program to move into the final development and production phase. Forget that in attempting to create a completely new military airlifter that was designed to fit somewhere in-between the brilliant Boeing C-17 Globemaster and the tried and trusted Lockheed Martin C130J ‘Hercules’ aircraft poor old Airbus Military had bitten off far more that they could chew. Clearly they failed to realise that as everything on the A400M aircraft was to be of completely new design [airframe, engines, avionics, wings and materials] this would inevitably carry massive additional risks to program completion timing. Forget too that for the purposes of this exercise what had originally been conceived as a EUR20bn airlifter program to be designed and built for no less than seven European government partners would, by the time the aircraft might finally enter service, cost maybe in excess of 30% more than originally planned. Forget the arrogance too and horrid and difficult though it may be for some to do begin to accept that as the A400M airplane has finally flown termination at this interesting juncture would set the air forces of many nations back to the point of there not being able to meet their respective NATO commitments a few more years from now. Forget too if you will that over the fifteen or so years since the idea of a European built medium lift military airplane was first aired in public people such as myself had vociferously opposed the A400M development idea predominantly on genuine concerns that related to cost and risk factors for the various governments involved. However, to my mind what matters most now is that having got this far it would be quite ridiculous for governments to walk away. So, time to finally commit please!
Despite the A400M project being close to three years behind the original schedule and ignoring the issue of who pays for the mess and what should be the final price for each aircraft built in what I imagine will be two distinct phases of the program build I do believe that governments should now speedily announce final commitment to A400M numbers proposed and production. OK, so a handful of former Airbus managers that chanced their luck without fully realising the risk implications or the virtual impossibility of meeting the original schedule should be strung up! Their failure to realise the implications of what they had taken on means that eventual ‘domestic’ government and/or export program or no the A400M will likely not make a penny of profit for Airbus even if production was to last for the next twenty years. But despite the damage limitation exercise and all the inherent failures that surround this program there is at the bottom of all this a great airplane that meets both strategic and tactical role demanded by the military. Indeed, suffice to say that while the A400M program may have been an unmitigated disaster from a length and cost of development point of view dramatic changes in military tactical and strategic requirement have placed the need for medium and heavylift air transport into renewed focus.
The message that Airbus is conveying is not at this stage even a veiled threat to cancel the A400M program. Even so, unless action is taken by the government partners very soon in the form of renewed program commitment and final agreement on price Airbus might soon need to think of doing just that. After all Airbus must account for every extra penny that is spent over the coming weeks and months to parent company EADS. In turn, EADS must then account for any further cost and additional losses to shareholders. Governments have of course lost vast amounts of mone