A400M deal elusive - negotiations to continue

Paris/Berlin: Critical talks on Thursday between Airbus parent, EADS, and NATO nations failed to arrange a quick bailout for the prestigious A400M military transport project, even as France and Germany called for urgent solutions to end a funding crisis that threatens to derail the project for good.

A400M  Image: Airbus

Technical problems and a wrongly negotiated contract have pushed the 20 billion euro ($27.75 billion) military transport project four years behind schedule and 11.2 billion euros over budget. A failure to resolve the issue can potentially threaten up to 10,000 jobs.

The plane is on order for seven partner nations – Germany, France, Britain, Belgium, Luxembourg, Spain and Turkey. With the largest number of orders, Germany, is also the most vocal member of the consortium arguing against any substantial relief to EADS, Airbus' parent. 

Even as French president Nicolas Sarkozy and German chancellor Angela Merkel met in Paris for a summit, EADS resumed talks with European government buyers in Berlin in a desperate bid to prevent soaring costs from snuffing out the project.

The group has already threatened to cancel the programme saying it is haemorrhaging scarce resources and affecting profitability of the entire group. It has said that if allowed to carry on unchanged the A400M contract has the potential to sink the profitable civilian side of Airbus' operations.

EADS has asked buyers for extra funding, to the tune of 4.4 billion euros, in order to remove what it says are anomalies lingering over from the original contract that have now become untenable. But governments are unwilling to sink in more taxpayer money.