Airbus Seeks New Talks with European Nations over Aircraft Delay Costs

 

Aircraft manufacturer, Airbus called for new talks with European governments to ease “heavy penalties” for delays to its A400M military aircraft on Wednesday, February 22.

This is coming after the aircraft maker took a fresh 1.2-billion-euro ($1.3 billion) charge in the latest blow to Europe’s largest defence project.

Chief Executive Tom Enders told reporters the aerospace group was still paying for the “original sin” of striking an unrealistic procurement deal when the plane was launched in 2003.

Airbus won a 3.5 billion euro bailout from seven European NATO nations in 2010 after being saddled with liability for wild cost overruns on its engines.

The company said on Wednesday it needed more relief following fresh problems in supplying the troop and armoured vehicle carrier’s advanced defensive capabilities, which have led to new penalties and cash being held back by governments.

Hailed at the time as an innovative, fixed-price commercial-style deal, the contract foundered over the problems with the West’s largest turboprop engines and an ambitious schedule for innovations such as ground-hugging technology to avoid radar.

The 2010 bailout included 1.5 billion euros to be repaid from exports that Airbus says are now looking more challenging. So far, the only non-European buyer is Malaysia.

Enders, who is said to privately regret not cancelling the project in 2010, declined to say whether Airbus would threaten to stop building the plane but denied that the project found itself in the same dire financial straits as seven years ago.

Nonetheless, he described the penalties as “inappropriate” given the fact that the aircraft was playing a key operational role in Africa and elsewhere.

The comments came as Airbus wrote to the core buyers – Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey – formally requesting discussions over the contract revisions.

Airbus shares fell more than one percent on the fourth-quarter A400M charge, which was about twice as large as expected and pushed total writedowns on the programme above 6 billion euros, Reuters reports.

 

 

 

 

 

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