Airbus says A400M won’t cost more

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Airbus Chief Operating Officer Fabrice Bregier says the contract changes it seeks in the wake of delays to the A400M military aircraft programme will not cost European taxpayers extra money.
 
Reuters reports this morning that Bregier told Les Echos in an interview that talks between Airbus parent EADS and seven European NATO countries aimed at reaching a settlement over the delays should be concluded this year.
“According to the current contract, EADS faces the risk of significant penalties for delays. We are not asking for these penalties to be lifted, but to be spread out over a new timetable that is both credible and binding,” Bregier said.
“If the governments accept, it won’t cost them anything, and that will reduce our risk.”
Airbus Chief Executive Tom Enders said last month the task of completing Europe’s biggest single military project within the original €20 billion contract was “mission impossible”.
Under a rare commercial contract for a military deal in 2003, seven countries — France, Britain, Germany, Spain, Turkey, Belgium and Luxembourg — ordered 180 planes to be delivered from 2009. Malaysia and South Africa ordered another 12. The cost impact of thesedevelopments on South Africa’s taxpayers is not yet known.     
EADS has said deliveries will now not take place before late 2012 and French senators said on Tuesday the first significant wave of operational aircraft would not be delivered before 2014.
The senators spoke after completing a probe into the A400M and said European leaders should intervene to rescue the project.
EADS blames delays in software delivered by a consortium of European engine manufacturers and has called for a reallocation of risks between governments, the company and its suppliers.
Industry analysts say that in practice this could mean waiving some penalties or asking engine makers to share the burden. Engine makers led by Rolls-Royce and France’s Safran have denied responsibility for the delays.
Reuters says EADS’ problems stem from the fact that it must deliver the planes to defence forces at a fixed price of about €110 million per plane while its suppliers’ liability is capped.
It has acknowledged it blundered by agreeing to sign the contract with pan-European procurement agency OCCAR but its supporters say politicians are partly to blame for overriding its choice of a Canadian engine in favour of a new European one.
The A400M contract is split between €10 billion for aircraft development and €10 billion for production.
EADS has proposed a compromise that would slow the initial phase of production to help weed out risk. A first basic model would be produced for 18 months, followed by a better-equipped model with more navigation aids but less national customisation.
South Africa ordered eight of the aircraft in 2004 at a reported price of R7.4 billion. 
SA Air Force chief Lt Gen Carlo Gagiano has said the “delay may oblige the SAAF to reconsider its perceptions about the future of the C-130 aircraft.” Gagiano has described the A400M as crucial to the SAAF`s future plans.