FT.com / Companies / Aerospace & Defence - Airbus threatens to scrap A400M aircraft
Airbus is threatening to scrap its €20bn ($28.8bn) programme to build the A400M military aircraft, Europe’s most high profile defence project, unless governments agree to come up with more money for it before the end of this month.
“We need to stop this constant drain on resources,” Airbus said on Tuesday. “We’ve asked the governments to take their share of the burden and this needs to be done as soon as possible.”
The threat is seen as a last desperate bid by the European aircraft maker to increase the pressure on the European partner governments that have signed up to the programme, particularly Berlin, to finance the cost overrun on the troubled project.
German is the largest customer for the aircraft and has so far taken a hard line in long-running negotiations to address the rising costs.
Analysts warned that abandoning the programme would be costly for the aircraft maker, which would have to repay €5.7bn in development funding under the original programme contract.
Cancelling the project would also prove hugely embarrassing for Airbus, which exclusively makes commercial airlines and is aiming to break into the defence procurement market via the A400M.
It would also prove a big setback for the main European partners in Nato, the transatlantic military alliance. The impetus for the A400M, which was first conceived in the early 1980s, came after the Kosovo conflict in 1999 which sorely exposed the lack of European military transport capacity.
The contract for the programme was signed in 2003 after Germany budgetary constraints had threatened to kill the programme. The US had strongly opposed the programme at the time in part to protect its near-hegemony over military tranport aircraft. Washington also argued that the funds would be put to better use in other areas addressing the large technology gap between US and other Nato forces.
Bad new for airbus, great news for more C-17 and 130J. Sounds more like posturing by EADS/Airbust TBH, turkeys dont vote for christmas and Politicians certainly dont vote for job losses in the middle of a recession.