Bloomberg:
Britain Signals It May Not Pay EADS for Cost Overruns on A400M
June 26 (Bloomberg) -- The U.K. signaled it’s reluctant to pay for cost overruns on the A400M military transport plane, saying talks with the European Aeronautic, Defense & Space Co. and other nations are in a “difficult” stage.
“This situation is very difficult and we want to be co- operative” with EADS, junior defense minister Quentin Davies, who has responsibility for equipment procurement, said in an interview in London. “But that absolutely cannot be at the expense of our armed forces and the British taxpayer.”
.........“My mind is open,” Davies said. “I would like to find a way of this project being saved but it can’t be at the expense of the taxpayer and the armed forces and we have certain requirements that must be met. Our position is absolutely clear. Our constraints are absolute.” .......
“The U.K. is signaling that it is not willing to make a cash contribution to the overrun,” said Nick Cunningham, an analyst at Evolution Securities Ltd. “It also sounds like the U.K. won’t compromise on the specifications. EADS may be left with the possibility it has to finish the project at great cost. There still may be further overruns and problems.” .........