Ultimatum for Europe
Airbus Warns It May Cancel A400M Project
European airplane manufacturer Airbus has said that the cancellation of the A400M military transport plane project has become a realistic scenario in the face of massive cost overruns. The company wants European governments to agree on a financing plan by the end of the month.
The pleasant glow of success following the initial flight of Airbus' A400M military transport plane in December didn't last long. Now, the company is threatening to stop further development of the plane altogether should those European governments involved in the project not agree on a plan to help out Airbus cover billions of euros in cost overruns.
Airbus spokesperson Stefan Schaffrath said on Tuesday that a cancellation of the project has become a realistic scenario. He appealed to those European countries which have ordered the planes -- including Germany, France, Great Britain, Spain, Turkey, Belgium and Luxembourg -- to reach a financing agreement by the end of the month.
BERTRAND GUAY/ AFP
Photo Gallery: The A400M Takes Flight
According to a Tuesday report in the Financial Times Deutschland, even Airbus head Thomas Enders no longer believes that the A400M development -- Europe's most important military program -- can be brought to a successful conclusion. Citing company sources, Enders said at a Christmas dinner with top management that he "doesn't believe any more in a successful continuation of the program."
Massive Cost Overruns
The paper reported that the development of the A400M is facing €11.3 billion in cost overruns. Originally, Airbus had pledged to supply 180 of the flying behemoths to its customers at a total cost of €20 billion. Schaffrath says that Airbus has developed plans to move engineers away from the A400M development should the plane be mothballed.
Airbus is hoping that those countries which have placed orders for the planes will cover half of the cost overruns, according to SPIEGEL ONLINE information. The plane-maker argues that much of the extra expenditure comes as a result of demands made by European governments. Instead of buying parts and supplies from leading manufacturers worldwide, Airbus was asked to develop the requisite technology within Europe.
Germany's military, the Bundeswehr, is the largest customer for the A400M, having ordered 60 of the aircraft in the hopes of replacing its 30-year-old fleet of Transall transport planes. The German government, however, has so far been stubborn in its refusal to compensate Airbus for cost overruns. In November, Defense Minister Karl-Theodor zu Guttenberg said "for us, loyalty to a contract is not just a romantic notion." Berlin's position seems to have budged little since then.
Negotiations on the future of the project are set to conclude later this month. Should the project go ahead, the first planes still are unlikely to be delivered until two or three years from now. Nevertheless, a cancellation of the A400M would not only result in a huge loss of prestige for Airbus, but it would also put the plane's customers in a bind. Not only do thousands of jobs in Europe depend on the project, but there is, at present, no realistic alternative to the military transporter.