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France, Germany urge A400M military aircraft funding solution

Text by News Wires

Latest update : 2010-02-04

France and Germany have called for an urgent solution to the funding crisis surrounding the A400M troop plane, Europe’s biggest military project, as Airbus resumed talks with government buyers.

REUTERS - France and Germany called for an urgent solution on Thursday to the funding crisis surrounding the A400M troop plane, Europe’s biggest military project, as Airbus resumed talks with government buyers.

The 20 billion euro project is four years late and 11.2 billion euros over budget, threatening up to 10,000 jobs.

EADS unit Airbus is appealing to a group of seven NATO nations for billions of euros in extra support to start full production of the plane, which first flew in December, but governments are reluctant to let taxpayers foot the whole bill.

“Everything must be done to reach a solution. It is a decisive project which must be resolved very quickly,” French President Nicolas Sarkozy said after a Franco-German summit.

“With regards to the A400M project, I think that the negotiations should be continued, and we agreed that this is a project of strategic significance, and that everything should be done to find a solution,” German Chancellor Angela Merkel said.

The two leaders were speaking at a news conference after a regular summit but stopped short of issuing a formal statement.

Their comments came as Airbus resumed talks with European defence officials in Berlin in a frantic bid to prevent the runaway costs killing off Europe’s largest defence project.

The A400M has been held up by engine and other technical problems, sparking testy exchanges between Germany, its biggest projected buyer, and Toulouse-based Airbus. Other buyers are France, Britain, Belgium, Luxembourg, Spain and Turkey.

Germany’s defence minister, who has taken a harder line than most over the crisis, warned Airbus not to overplay its hand.

“There is a contract and we have an interest in not allowing ourselves to be pressured unduly,” Karl-Theodor zu Guttenberg told reporters in Paris after the bilateral summit.

Accounting pressure

Guttenberg was speaking before heading off to Istanbul for a meeting of NATO defence ministers, part of a flurry of meetings being held across Europe that could determine the A400M’s fate.

The NATO meeting will formally tackle deployments and training needs in Afghanistan but delegates did not exclude a side meeting of the seven A400M partners late on Friday.

The A400M is designed to put soldiers and heavy equipment in rugged combat zones like Afghanistan, filling a gap in aircraft capabilities between Boeing’s jet-powered C-17 Globemasters and Lockheed Martin’s C-130 Hercules turboprops. Would-be customers, especially Britain, want it in service as soon as possible.

Projected delays mean it will not enter service before 2013.

Germany called on Wednesday for an urgent solution, but a French official said the parties aimed for a deal by the end of February, a prospect likely to dismay aerospace group EADS.

Facing pressure to complete its 2009 accounts and decide on hefty A400M charges, EADS had set a Jan. 31 deadline for a deal.

Airbus at one point threatened to shut down the A400M if a deal could not be reached soon, risking a major confrontation with countries that call most of the political shots at EADS.

EADS is controlled jointly by French and German interests and the French and Spanish governments directly own stakes.

Talks broke off last week over a 2.4 billion euro gap in the amount each side is prepared to invest to keep the A400M alive, with EADS seeking 4.4 billion and buyers offering 2 billion.

Sources close to the talks said on Wednesday the differences had narrowed ahead of the Berlin talks.

Spain has proposed that buyer nations pay 2.6 billion euros towards cost overruns, newspaper El Pais said on Thursday, citing a defence ministry letter.


Date created : 2010-02-04


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