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Nations agree new contract for delayed Airbus A400M -sources

Credit: REUTERS/Regis Duvignau

Airbus has reached final agreement with European buyer nations for a revised contract for its delayed A400M military transporter plane, resetting Europe's largest defence project after a lengthy wrangle over costs and military capability.

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PARIS, June 13 (Reuters) - Airbus AIR.PA has reached final agreement with European buyer nations for a revised contract for its delayed A400M military transporter plane, resetting Europe's largest defence project after a lengthy wrangle over costs and military capability.

Two people familiar with the matter told Reuters that the long-awaited contract revision, which follows more than a year of talks, would be announced in coming days.

Airbus and arms procurement agency OCCAR, which coordinates the A400M purchase for seven core nations, declined comment.

The A400M was commissioned in 2003 to give Europe an independent airlift capacity to support military or humanitarian missions, rather than relying on the Lockheed Martin LMT.N C-130 or the now out-of-production Boeing BA.N C-17.

A 3.5-billion-euro bailout from seven core buyer nations - Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey - rescued the programme from cancellation in 2010 after delays and cost overruns.

But problems remained with some of the plane’s classified defensive systems, as well as some types of paratrooper drop and helicopter refuelling, prompting a new set of contract talks.

Industry officials blame some of the project’s problems on an over-ambitious wish list from buyer nations, designed in some cases to support local jobs. But the largest buyer Germany has criticized Airbus for failing to do what it promised.

Airbus Chief Executive Guillaume Faury said in April that talks were "moving forward" towards an agreement by mid-year.

Buyers have already agreed that Airbus needed more time to deliver the plane than originally planned.

In return, Airbus has pledged to provide "all necessary support and resources" to the A400M programme.

Despite being a transporter plane, designers say the A400M’s advanced systems such as ground-hugging technology make it one of the most complex military aircraft ever built in Europe. France has praised its performance on operations in Africa.

Even so, Europe’s new troop transporter may never go into battle with all the military capabilities first planned after buyers agreed to let Airbus negotiate an opt-out for features deemed too complex, a document revealed last year.

(Reporting by Tim Hepher, Andrea Shalal Editing by Michel Rose and Geert De Clercq)

((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters Messaging: tim.hepher.thomsonreuters@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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