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A400M deal in the offing? news
24 February 2010

Europe's 20bn Airbus A400M military transport project may yet find a resolution with European governments reportedly having struck a deal with Airbus parent EADS to salvage the badly struggling programme. According to reports, partner nations may agree to pay 10 per cent more for the price of each aircraft and help EADS recover development losses incurred on the programme.

The transport aircraft, which is also Europe's largest joint development of a military project, is $5bn over budget and four years behind schedule. EADS regrets having signed a fixed cost contract with partner nations that left it bleeding badly as the development programme of the aircraft, primarily the engine, went completely out of gear.

Late last year, Airbus parent company, EADS, threatened to abandon the project as partner nations were unwilling to share losses to the extent that it expected them to.

However, it is now believed that a deal may be announced as soon as Thursday.

Details being made available now would suggest that Britain, along with six other European partner nations, agree to a 10 per cent price hike that will allow EADS to raise about 2bn (1.75bn). Over and above this raise, another 1.5bn is expected to be made available to EADS in loan guarantees.
If agreeable to EADS, it would help rescue the project and save as many as 10,000 European jobs.

EADS has already written off 2.4bn in losses.

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A400M deal in the offing?