Airbus chief looks to cancel A400M unless Governments cough-up

[Grimweasel]

BBC News - Airbus chief 'may cancel A400M' (http://news.bbc.co.uk/1/hi/business/8452493.stm)

Well, end of Jan looms rather fast and I can't see Gordon and his cronies stumping up any more cash - it's all indirectly found it's way into the private pockets of the bankers who have all fueled the very equity rallies that their bonuses depend on. How's that for a self licking lollipop! Cheers.

From the BBC

"The chief executive of Airbus has warned he is prepared to cancel production of the company's A400M military transport plane.
Tom Enders told BBC World that he would consider ending the programme if European governments failed to cough up more cash.
"We cannot complete the development of this aircraft without a significant financial contribution," he said.
Delays to the A400M project have already increased its budget by 25%.
The project is now 5bn euros ($7.25bn; £4.5bn) over its initial budget as a result of weight and engine problems.
The seven European governments that have ordered the plane will decide by the end of January whether to pay more."

[amateurflyer]

I suppose it all boils down to business at the end of the day on airbuses front. No doubt that there are arguments all over pprune 'bout the A400M, but for the same price of the 25(?) A400M's ordered by the UK, I wonder how many more C-17's we could purchase........problem is, we don't seem to have the money.....:\ It seems we're kinda stuck......

[L J R]

Is that an Echo, Echo, Echo I hear

[barnstormer1968]

So, apart from losing face in the military world, and probably never being offered
another military contract ever again (as well as gifting sales to competitors), just
how much would airbus lose if they cancel the 400?
They will have to possibly close various facilities, make employees redundant
(at a huge cost) etc etc.
This could be seen as two failures in a row (380 problems, and now 400), which
have threatened the company!

IMHO airbus are in no position to threaten anything at all, and should be grateful
if the customers stay with them.
Not only are there very god alternatives to the product (of which airforces are
already using/familiar with), but there could also be off the shelf frames available
from the former eastern block if anyone was desperate enough (yes I know most countries won't consider this).

[Bob the Doc]

Dear Mr Airbus

You told us you could make an aeroplane for a certain amount of money. We agreed this price and ordered some on that basis. You have now decided that your original quote was too small. I make that YOUR problem and not mine.

Yours

A. Customer

[rog747]

i had just seen the bbc link and did a post in rumours,
sorry i see you already have it up here, silly me
apolgies

[sierratangomike]

The Big A employs an awful lot of people in some of the customer countries. Bit of an opportunistic attempt to see if any frightened politicians will loosen the purse strings in the name of employment. Don't believe they intend to go through with the threat.

[herkman]

So Tom Enders is coming the big bluff. However has not considered that the end of the A400, must surely mean the end of his career.

Whilst that would be a sad situation in both cases, but the biggest people who will suffer are the Airbus staff. Other aircraft are available, they may not be the "ants pants" but they will get the job done.

Airbus need to understand that Bully tactics will not work with most of their customers, and will cause a loss of face with people who could buy their other products.

Airbus got themselves into this situation, and they need to find a way that will turn this situation, to a WIN WIN situation.

Regards

Col

[Phil Latterly]

Investment in.../retention of... high tech aviation jobs have a political price; in today's world everything can be calculated and weighed up against other jobs or investment opportunities.

If the Govt calculates that it comes to £1m/job, compared to £10,000 in the Services, or £1,000 in the Health Service, then at least we can all see what is worth the money.

My suspicion is that a saved Airbus job in this scenario will come at too high a multiple over other industry jobs.

Enders can't bluff, with shortfunding A400M at €100M every month.

[Jig Peter]

The A400 programme was largely pushed through by the former boss, one Noel Forgeard, a man with more political connections than industrial (let alone aeronautical) experience. He was also "in charge" when the A380 programme's basic decisions were taken, and fell from grace over the sale of some of his shares before the news of the A380's problems became public. ("The evil that men do lives after them" ???)

Tom Enders was brought in to start clearing things up (and Louis Gallois, formerly of Aerospatiale, was persuaded to leave French Rail to take over EADS). The problems with the A400's FADEC were hardly an Airbus responsibility, while reorganising the "upsizing" of what used to be CASA in Spain was also a factor ...

Personally, I don't think Mr. Enders and Mr. Gallois are bluffing, for the military programme (which Jean Pierson, Mr. Forgeard's predecessor at Airbus wouldn't have touched with a barge pole) is bleeding EADS/Airbus dry, it would seem. If the Big Chop comes, it will be up to the politicians in several countries to cope with the job losses. Cancellation would also mean the end of Europrop International as well. Meanwhile, EADS seems not to have been invited to take part in the meeting scheduled for next week, while finding a politico able or willing to speak to EADS/Airbus is said to be "difficult" ...

[Green Flash]

So, -17's and J's it is, then. We could do worse. Maybe some C-27 class cabs for in-theatre lurking?

[Good Mickey]

The biggest winners in this may well be QQ. This should give the green light for C17 heavy drop capability and although already cleared with USAF the Brits would need to complete extensive and expensive T&E.

Where do I sign?

GM

[bvcu]

Think we should remember this was not a full commercial project, the engine would never have come on a proper commercial deal, when for political reasons various countries and their companies had to have a share . But when has it ever been different for a collaborative military project. Be a shame to see it go as there is a need out there for the capability. The continued use of a 1950's design is surely not financially viable in the long term. I know its a good a/c but not by modern standards in terms of fatigue and maintenance costs, unless you're an airforce with low utilisation when it doesnt matter !!

[Squirrel 41]

Jig-Peter,

I applaud your continued enthusiasm for all things A400M, but I question your objectivity. Enders and Gallois are businessmen playing hardball, and in a BBC clip (BBC News - Airbus statement overshadowed by A400M (http://news.bbc.co.uk/1/hi/business/8453931.stm)) Enders (?) defends the (apparently) 30+% price rise as still good value.

Whether this is true or not, I'm still firmly in the "bollocks" camp when it comes to the "we've got you over a barrel, where's your chequebook" tactics that Airbus is playing here. Perhaps the journos or the lawyers on here can tell us which law the contract is written under - because if it's English law, then the customer can ask the Court to order "specific performance" - in other words, fulfil the bl**dy contract and if you're going to lose your shirts, well, too bad.

Airbus / EADS is a large, profitable multinational company that is wholly able to bear the losses that their incompetence - in engineering, project management and contract negotiation - have put them in. Let them deal with it and may this be a salutary lesson to industry.

I understand that it's the Germans who are hanging toughest on this - well done! Long past time for UK MoD and DE&S to get some spine with industry and now would be the perfect opportunity. 25 A400Ms for the money we've contracted for and damages because of your delays.

Crack on, Airbus....

S41

[sierratangomike]

Squirrel41, I laud your sentiments but, as ever with the law, it's not clear cut.

I don't know which law the contract (or contracts) is under. If it was English law, the remedy of specific performance would be available, but Courts are generally reluctant to order it and will not do so where they feel they cannot adequately supervise performance of the contract, or where the claimant would be adequately compensated in damages.

It would be interesting to see it argued out as to whether the A400M is sufficiently special that money damages and buying an alternative wouldn't be an adequate remedy. I suspect that argument would be unlikely to work. However, the damages for Airbus repudiating the contract would be very substantial (wasted expenditure, costs of sourcing alternatives on short notice, etc) and, added to the money they've thrown away getting the project to this point and abandoning now, would still add up to a very unattractive option.

[Jig Peter]

Nobody, my friend, is denying the mistakes made under Mr. Enders' predecessor, particularly in project management and contract negotiation - that's what Mr. E's got to sort out. But it's more than a bit hard for you to have a go at the engineering side of Airbus, which seems to have come up with something promising - even innovative technically in many ways.
Given that the problems down at what was once CASA were soon being sorted by the new team Mr. Enders had put in place, the big problem outside his remit lay, surely, inside Europrop, who made the original error to "do" the FADEC software to the wrong standards - that alone lost the programme some 18 months (IIRC).
Secondly, the OCCAR set-up seems to me, a mere outsider, an odd business, though I suppose it's not all that different from the Organisations set up for Tornado and Eurofighter/Typhoon (it always seemd odd to me that there "had" to be a separate outfit for Typhoon - surely the Tornado outfit could have taken up the running?). But that's another story and I apologise in advance for any near-thread drift towards the odd way multinational military programmes are "organised".

PS See (or rather listen to) the podcast about flight tests so far in "Algy's"
thread ...

[twb3]

Was this a cost-plus contract or supposed to be fixed price? In the shop I work in, we can't go whinging off to the customer for more money on a fixed-price contract, and don't have the option to threaten to just not deliver at all.

TWB

[hugel]

Fixed price is notoriously difficult to estimate for: the technology is emerging, often state of the art and subject to major shifts in requirement. Best solution is to proceed cost-plus with risk sharing for feasibiliy and design-proving and fixed price for production on a per unit basis.

Airbus' first propeller and first military aircraft. It is hardly surprising that it hit problems. It is naive in the extreme to assume that it is like buying a newspaper. The customers often don't know what they want, and even if they do, it is often expressed in the language of the platform it replaces. Oh and they change their mind several times even during the feasibility stages. The mistake Airbus Mil made is lack of risk assessment and management.

hugel

[hugel]

Re. joint procurement management team for Tornado and Typhoon: if I remember rightly, the two colocated teams for NAMMA and NEFMA merged a number of years ago...

hugel

[Sgt.Slabber]

Hugel

The mistake Airbus Mil made is lack of risk assessment and management

Nothing new there then...

Re. joint procurement management team for Tornado and Typhoon: if I remember rightly, the two colocated teams for NAMMA and NEFMA merged a number of years ago...

Correct - became NETMA... From the Eurofighter site - Eurofighter Typhoon - NETMA (http://www.eurofighter.com/or_ne.asp)


NETMA
The NATO Eurofighter and Tornado Management Agency (NETMA) is the prime customer for the Eurofighter Weapon System, in this unique four-nation programme.
NETMA replaces the former NATO Multi-role Combat Aircraft (MRCA) Development and Production Management Agency (NAMMA) and the NATO EFA Development Production and Logistics Management Agency (NEFMA), and is responsible for the joint development and production of the NATO European Fighter Aircraft and the NATO MRCA (Tornado)....and from OCCAR - Welcome to occar (http://www.occar-ea.org/)

OCCAR
The Organisation Conjointe de Coopération en matière d'ARmement was established by an Administrative Arrangement on 12th November 1996 by the Defence Ministers of France, Germany, Italy and the UK. Its aim is to provide more effective and efficient arrangements for the management of certain existing and future collaborative armament programmes

A lot of the people in NAMMA/NEFMA were not only co-located, they were the same people.

[Jig Peter]

I have a feeling that creating "Airbus Military" was one of the measures adopted when the "new team" took over from what Mr. F had left behind when he was ousted. CASA (as was) may well have been hopelessly overwhelmed by the A400M's requirements, having until then dealt only with much smaller cargo aircraft. Getting that end sorted would result in some (but not that much) delay to the programme, but the big killer was surely within Europrop. Whatever the reasons (and my ideas are as much supposition as anyone else's), it was surely Mr. Enders' and Mr. Gallois' job, under Stock Exchange rulings, to make sure that the danger to EADS/Airbus viability of going on or cancelling was openly aired.
Any support for the programme would surely amount to about 1 3/4 bn Euros per partner, more or less according to numbers on order. The A400M problem's not one of your "threatened" banks - and look how much they got without a governmental squeak (said somewhat in jest).

It seems to be flying quite nicely, though (which didn't save TSR2 ...)

[airsound]

Despite a slightly questionable headline
The €20bn plane that may not fly
Sarah Arnott's piece in the London Indy's Business Section is a reasonable tour de l'horizon for non experts. (Like me)
The €20bn plane that may not fly - Business Analysis & Features, Business - The Independent (http://www.independent.co.uk/news/business/analysis-and-features/the-euro20bn-plane-that-may-not-fly-1866040.html)

airsound

[Impiger]

And Plan B ain't all that bad so long as we actually get the right balance of Albert J and C17. Indeed, many have been advocating this as a more sensible option in any case. It seems pretty clear to me that operating 2 fleets is going to be more cost effective than operating 3! So roll on the end of the month and a firm decision rather than one of those rather wonderful Sir Humphrey moments 'The Minister has decided not to decide ... and that's his final decision on the matter'.:D

[Low Flier]

"They signed a stupid contract and all the current management readily admit it was a stupid contract."

That says it all.

[911slf]

As far as I can see, the only way European tax payers can avoid getting ripped off is to pay cash on delivery for existing products - with no specification changes. How that can be squared with a European aircraft industry continuing to exist is beyond me.:sad:

[SVK]

Mr Impiger,

By strange coincidence I have been watching my 'Yes Prime Minister' DVD this very morning! (One of my better Xmas presents this year) How I am laughing at the issues affecting Jim Hacker's Government:

Should the Prime Minister buy Trident?
Where did the sudden Economic Financial Crisis come from? Why didn't the Treasury see it coming?
Should we send an Airborne Brigade to St George's Island on a 'goodwill' visit to counter the threat from Yemen?


You couldn't make it up. No wait - they did!

:ok:

SVK


- Apologies for the Thread Drift...

[chopper2004]

https://aviationvoice.com/airbus-announces-63-drop-in-profit-for-2016-a400m-to-blame-201702231051/

[Lyneham Lad]

In an article on Flight Global: (https://www.flightglobal.com/news/articles/airbus-to-conclude-a400m-contract-revisions-in-month-455764/?cmpid=NLC%7CFGFG%7CFGFDN-2019-0220-GLOBnews&sfid=70120000000taAm)-

Airbus expects to conclude contract revisions with A400M customers “in the coming months”, and says it “completed significant de-risking” of the military transport programme during 2018.
Speaking at the European group’s annual results presentation in Toulouse, outgoing chief executive Tom Enders said Airbus has “succeeded in re-baselining the programme with our government customers”.

[VinRouge]

Aah... The Homer Simpson car of the Military air transport world.

[tdracer]

Aah... The Homer Simpson car of the Military air transport world.

I'm sorry, I really do try to restrain myself from blatant Airbus bashing (I have a pretty obvious prejudice).
But that line made me literally laugh out loud - enough so that my wife asked me what I was laughing at :}:ok:

[atakacs]

Is there any hope to see civilian use for the technologies developed in this program ?
An ATR-42 NEO with two of those bad ass engines might be interesting...

[ORAC]

https://www.airbus.com/newsroom/press-releases/en/2019/02/airbus-certifies-a400m-cargo-hold-tanks-refueling-unit.html

Airbus certifies A400M Cargo Hold Tanks refueling unit

https://cimg0.ibsrv.net/gimg/pprune.org-vbulletin/1024x576/image_bdcbbf5cec8f800fa6ac0b41eb6572be1a87a017.jpeg