Airbus mulls alternatives ahead of critical meet on A400M

Seville, Spain: Airbus says the troubled A400M military transport project may have to be abandoned as it fears that partner nations will fail to reach a deal this month to agree to pay out several billion euros in additional development costs. Negative fallout would cost Europe thousands of jobs.

Military officials from the seven countries were due to meet Thursday in London in a bid to arrive at a consensus regarding additional financing for the A400M aircraft, which is supposed to replace old warhorses such as the American Hercules C-130 and the French-German Transall.

 ''Obviously, until the last minute we will push hard for a positive solution,'' the company's chief executive, Thomas O Enders was quoted as saying in an interview on Monday. ''But at this point I personally see the chances of reaching an agreement by the end of the month at about 50-50.''

The A400M is bleeding Airbus and its parent company, European Aeronautic Defense and Space at a rate of around €100 million each month. The aircraft is nearly four years behind schedule, overweight and as much as €7 billion, or $10.6 billion, over budget.

EADS has already written off €2.4 billion in costs for the project and is loath to flush more cash down the drain.

EADS has asked partner governments to pay an additional €5 billion for the planes, which increases costs by 25 per cent increase over the original €20 billion contract.