ANOTHER A400M DEADLINE LOOMS
By Yvonne Headington
14 Jan 10. Airbus continues to pressure the seven A400M partner nations to reach a re-financing agreement, setting a deadline of 31 Jan 10. The company has already made provisions of €2,400m to cover losses on the troubled air transport project, which is over three years behind schedule, and has asked customers for €5,300m extra funding.
During a joint EADS/Airbus press conference on 12 Jan 10 at the A400M assembly line in Seville, Airbus CEO Thomas Enders stated that the company “will do everything possible and reasonable to continue this programme”. However, the lack of agreement on extra funds might “jeopardise the whole of Airbus”. Enders added “I will not go down this road”. Although Airbus continues discussions with individual customer countries, the Company is asking for a common “official line”.
The A400M programme has led to the creation of some 40,000 European jobs and the company is currently spending between €100m to €150m per month. Louis Gallois, CEO of Airbus’ parent company EADS, explained that the Company needs to know where it is going financially. Terminating the programme would be complex and would require a repayment of €5,700m development funding.
The original €20,000m fixed price development and production contract for 180 A400M was placed in 2003 (by Belgium, France, Germany, Luxembourg, Spain, Turkey, and the UK). Malaysia also has a requirement for four aircraft but South Africa has cancelled a potential order for eight.
Gallois admitted that mistakes were made in accepting the original contract given the aircraft’s technical complexities. The A400M is a complicated beast with weight issues and, in addition to being the first large transport aircraft project with a stipulated speed requirement, the initial five to six year delivery timescale has proved to be unrealistic. The new TP400-D turbo-prop engine produced by Europrop International (EPI), the European aero-engine consortium, has posed particular challenges while management issues have contributed to difficulties. Gallois described the politically imposed industrial structure of Europrop as “baroque”.
Designed to embody both a strategic and tactical capability, Airbus insists that A400M still offers better value than the C-130 or C-17 despite cost increases. France was due to take delivery of the first production aircraft (against a requirement for 50) in 2009 but the schedule has now slipped to 2012. The UK has ordered 25 aircraft at a forecast cost of £3,285m as at 31 Mar 09 with delivery originally due to begin in March 2010. As at October 2009, the UK’s first delivery is now anticipated by the end of 2014.
The 3hr 47min maiden flight of the first A400M (known as MSN 1) took place on 11 Dec 09, followed by a further successful flight on 23 Dec 09 and a third on 7 Jan 10. MSN 2 is due to fly by mid-March 2010 and MSN 3 by the middle of the year. MSN 1 and 2 are to be based at Airbus’ facility in Toulouse while MSN 2 and MSN 4 will be based at Seville. MSN 4 is to be systems-fitted according to UK requirements and is due to fly by the end of the year. The sixth A400M is scheduled to be the first production standard aircraft.
Germany is the largest A400M customer, with a requirement of 60 aircraft, and has reportedly taken a hard-line on negotiations concerning cost overruns. Officially the UK remains committed to the programme but “not at any cost”. The issue of A400M finance was on the agenda of a European Defence Procurement Ministers’ meeting held in London on 14 Jan 10. It is unlikely that this meeting will result in any official statement regarding the way forward for A400M and Ministers may reconvene in the near future. In the meantime Airbus appears resolute in maintaining the end of January deadline for resolving the dispute.
After the meeting concluded, Minister for Defence Equipment and Support Quentin Davies said:
“Partner nations have had discussi