Palma De Majorca, Spain: Europe’s largest defence project was back on track Wednesday after Spain said aerospace giant EADS had reached a deal over costs for the long-delayed A400M military transport plane.
“I can tell you with great satisfaction that we have reached an agreement in principle between the seven partner countries and EADS,” Spanish Defence Minister Carme Chacon told reporters on the sidelines of informal EU talks.
EADS had threatened to pull the plug on the project unless the seven NATO countries that ordered 180 of the aircraft for 20 billion euros (27 billion US dollars) stump up more cash
to cover cost overruns of about 5.2 billion euros.
Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey have been involved in difficult negotiations in recent months over how to share any additional funding between client states and the European manufacturer.
Chacon refused to give details of the deal, saying only that some “technical details” that still remained open would be discussed and finalised on Thursday by EU defence ministers at at their informal talks in Palma de Majorca.
“The negotiations have advanced very favourably. The success that the plane already was is now a success of European industry,” she said.
Contacted at its headquarters in Paris, a spokesman for the European Aeronautic Defence and Space Company (EADS) said he could not immediately comment on news of the agreement.
A spokesman for the German defence ministry in Berlin said there had so far been no “written response” from the aeronautics industry to the proposals made by the seven partner nations last week.
“Such a response is a preamble to any advance” on this issue, he added.
The seven nations had offered a total of two billion euros in additional financing to cover the cost overrun by reducing the number of aircraft that will be built combined with paying a higher price for the planes.
France then suggested that the seven nations provide EADS with an additional 1.5 billion euros in credit guarantees. It said it was willing to provide 400 million euros itself in credit guarantees.
Last week EADS said it was ready to put up 800 million euros on top of the 2.4 billion euros that it has already invested in the military carrier built by its subsidiary Airbus. That would still leave a shortfall of 900 million euros.
The A400M is a highly innovative aircraft, which can carry troops, armoured vehicles and helicopters. The project is three years behind schedule mainly due to problems with the construction of its huge turbo-prop engines.
The aircraft, built to replace ageing military cargo carriers in several European air forces, carried out its first test flight in Spain in December.
With a list price of about 100 million euros, the A400M can fly as high as 40,000 feet (12,000 metres) and can land on short, unprepared runways.
It has four 11,000 horsepower turbo-props that are the most powerful ever made outside Russia and can carry two attack helicopters or 116 soldiers.
EADS, which faces stiff competition from its arch rival US aerospace giant Boeing, designed the plane to compete with, and eventually to replace, existing transporters such as the Boeing C17 and Lockheed Martin C130J Hercules.
The A400M was first agreed in 2003 by the seven nations.
The maiden flight was first scheduled for 2008 and air forces were to take their first deliveries at the end of 2009. The first deliveries are now not expected until at least early 2013.
South Africa dropped its order in November — a move which stunned Airbus — because the agreed cost of 1.2 billion dollars five years ago had grown to 6.1 billion dollars.
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